First deal analysis for 2 different strategies

[Ajay A.]

Hello Everyone,

First post from a newbie, so please go easy on me :)

I'm looking for properties in Idaho and my strategy is going to be either BRRR (buy-rehab-rent-refi) or

house hacking (if its convenient enough. I did a rough analysis using 50% rule, but not sure how to do the same kind of analysis for house hacking.

Lets say its this property at 123 Turner St.

Purchase price : $74,900

Offer price: $60,000

Down payment: $39,000 (65%)

property tax: $972/yr.

Insurance: $132/yr.

Property Type : Duplex (Owner Occupied)

Monthly rent from second unit: $410

Repair costs: Looked clean from the pics, estimate $2000 for new carpet and old wooden cupboards

Now, If I were to BRRR, and not live in it,

Including all costs should give me a cash flow of $218/mo

How would I analyse it for House Hacking? Just use one unit's rent? Or do I add in the current rent I'm paying since I'd be staying rent free?

If I use 50% rule and only use rent from 1 unit (since I'll be staying in the other) I get a cash flow of $13/mo. (woohoo! ;-) ) , with the additional gain of living rent-free,

If I were to add in my current rent ($655/mo.) to the rent from 1 unit, it would give me a cash flow of $340/mo.

I'm just trying to compare strategies here (BRRR vs House hacking) and not sure if I'm doing the right kind of quick analysis. Appreciate any assistance, Thanks!

[Jack Aduwo]

Hi @Ajay A. I am not a house hacking expert or BRRR expert coz i have never done both. So here is my two cents from a Buy-Hold investor point of view.

1) Leverage as much as you can. I would not recommend 65% down. If this is your first primary residence then just put 3.5% down and use the other 61.5% towards your next investment

2) It depends with what is your goal and current situation. If you have no urgent need to make quick cash then go for the long term cash making option.  

3) Remember with house hacking your likely to qualify for the Idaho reduced tax on primary residence. So you should expect tax to be about  486.  Just google about

4) If you cant decide between hacking and BRRR then i would recommend you put 3.5% on this duplex and hackit then use the other 61.5% to buy the next investment that you can BRRR