Miami Numbers: House Hack vs. Rent and Invest Elsewhere

[Jack Butler]

Hey everyone. First time poster. I live in Miami, where the rent:purchase price ratios aren't great for generating cashflow. I like the idea of house-hacking, but the numbers aren't convincing.

I haven’t seen any calculators that show the cost/benefit analysis of house hacking vs. renting and investing elsewhere, so I've made my own here in google sheets that considers three scenarios:

1. Buy a SFR (not house-hacking)
2. Buy a Duplex and house hack (i.e. rent out part of it, invest the rental income)
3. Rent a reasonable studio, and invest the savings from not buying

Feel free to add comments here, or in the doc if you disagree with these inputs or calculations. These numbers are specific to Miami in the Little Havana neighborhood. These numbers suggest that it never makes sense to buy SFR ever, unless you house hack w/ roommates. I'm tempted to continue renting, and put my money in another market where I can get a better cash-on-cash return.

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In summary, it's a tradeoff between the following:

- House hack: buy a duplex for ~375K, get around $1,400/month in rental income from a 2br. PITI is ~$2,500/month.

- Rent: a decent studio is around $1500/month. Assuming 6% return from a Vanguard index fund.

- Outcome: It would take at least 5 years before the income earned would be worth it. I'm thinking I can get a better COC return with another strategy.

 Thoughts? Am I missing something obvious? This seems totally at odds with some of the more aspirational strategies on BP like this multifamily one.