In escrow to buy a house for house hack, I have a few questions..

[Ivan Lu]

Hello everyone!

This is my first post after being a lurker on the forums and I can't believe what's happening in the market right now. It's insane here in Southern California. I've been playing around with the idea of house hacking for a while now and decided to get pre-approved by my lender and look for some houses to invest in. I'd like to get your guys' feedback and thoughts. I found one I liked that's close to a couple of universities so I figured I could rent out the bedrooms to local students or single young professionals. Given the current climate with Covid, I know the rental market for students might not be as hot as when they're all on campus but I'm optimistic things will return to normal towards the end of the year.

Here's some info regarding the house;

-Built new within last 5 years, 6BR/4BA, 2700 sq ft.

-List price $550k, had multiple offers

-Accepted offer of $600k after beating out 17 other offer for my first deal! (Did I say this market was insane or what?! We will see if I over-bid when we get the appraisal - I'm protected by a couple contingencies to walk away from the deal if need be. I'd be lying to you to say I wasn't nervous about this).

-$600K purchase price

-20% down ($120,000, total cash invested after closing costs around $137,000). 

-Mortgage with insurance, taxes, utilities, solar lease payment is to be around $2800

I plan to rent out each bedroom totaling approximately $5,100.

Factoring in the vacancy rate of 5%, if all goes well, I'm looking to cash flow around $2,000 per month.

I plan to self-manage. Worst case scenario if I find out I hate self-managing and I'm tired of it, I'll put it up on the market for rent for approx. $3600-$3,900 a month.

I just wanted to get your guys' thoughts, suggestions, advice, and constructive criticism about this. Are my numbers too optimistic? What other factors am I missing?

Thanks in advance for your input!

-Ivan