Would love to get second look over my assumptions, challenge/reveal any flaws in my current plan, and listen to any suggestions to successfully house hack in Austin, TX.

Main Goal: House hack to live for free, cash-flow ~$150-200, have the ability to cash flow some after I plan to move out in a few years.

My situation: Newbie and aspiring real estate investor looking to purchase my first deal at the end of 2020 (Ideally November/December). Just hoarding cash right now to utilize a low 3.5% FHA downpayment. Checked with a local lender and got pre-qualified for a 299k loan (not sure how high my buying power truly is, I just entered that number in the application). I'd love to do the typical multi-family 2-4 unit strategy but don't think it's going to work out for me if I want to be in this market. So I ran the numbers (see below) for house hacking by the room in a 4/3+ SF home and seems to work for me. Given this strategy, the numbers actually work out for a lot of deals but that doesn't mean its right for me. I understand that there shouldn't be any emotion in an investment but since this will be my primary residence that I live in with my girlfriend and three roommates (two of which are my current roommates that I rent with and prefer to stay with). I am trying to find the right balance between something we want to live in and being a smart buy and hold investment.

I'm going to be a new investor and with no knowledge of construction, I was thinking that I'd want my first deal to be a newer home (2010+) so I can cash flow from move-in, low cap ex reserves to put away, and justify the rents to my roommates to move farther from the city than we are used to. Of course, I plan for the majority of my other deals to be value-add opportunity homes with a rehab budget but my main goal is to get started and eliminate my housing cost right now.

Location - Love this pocket in North Austin that's close enough to the city but relatively affordable:

Rent Assumptions in a 4/3:

- Room #1 w/ personal bathroom: $700
- Room #2 w/ shared bathroom: $600
- Room #3 w/ shared bathroom: $600
- Girlfriend sharing master bedroom w/ me: $450

Total rent = $2350

Deal Analysis on a 280k home:

Questions:

(1) Although $127/month doesn't seem too great, with the low down payment I'm seeing 9.9% return not to mention my current rent savings if included would mean 62%/year return while I'm living in it. What I'm worried about is if I can't get it to cash flow when move out in 2-3 years. Any thoughts advice from the community here?
(2) Are there any other house hacking strategies that others have found successful in the past year or so in this market?
(3) Any assumptions I'm missing/wrong on my analysis (excluding utilities and HOA)?
(4) Feel free to leave any other thoughts, comments, or suggestions.

Austin, Texas

2 Votes