Tips for My First House Hack?

[Grant Otting]

Hey, BiggerPockets members!

My name is Grant, I have recently been studying real estate and planning for my first deal once I'm out of school. Currently, I am saving money for a down payment once I have a deal lined up. I have been practicing utilizing the tools here on BiggerPockets to analyze rentals and I noticed some of the deals have a nearly 0-3% CoC ROI. These properties were duplexes and I would be house-hacking them should I acquire them. Because I am house hacking, is 0-3% CoC ROI really an issue? I would be living for free and building equity in a property, add this to the fact I would have income from a full-time job, this seems like 0-3% CoC ROI isn't much of an issue if you're house hacking. Let me know if my logic is flawed as I am young and most likely naive!

[Dan Guenther]

Hey @Grant Otting, welcome to the community! 

For your situation, I'd try to change your focus away from CoC ROI and focus more on Networth Return On Investment (NWROI). This metric is really helpful when looking at house hacking, especially for your first deal. House hacking and real estate investing in general come with a lot more benefits than just cash flow. With NWROI you take into consideration more than just the return on the cash you invested. These include tax savings, depreciation savings, loan pay down (increasing equity), cash flow, appreciation, and one of the most important for house hackers is the amount you will save yearly by paying reduced or no rent. When you look at this bigger picture I think you'll find that the returns on your first house hack are going to be much greater than what you are currently looking at.

Best of luck to you!