Analyzing a House Hack in the Boston Area

[Jeffrey R.]

Hi fellow BP-ers,

I’ve been lurking on BP for a while, trying to learn as much as I can in the process, and I’m planning on making a purchase in the next 3-6 months. My goal is to find a 2-3 family in the metro Boston area that I can house hack in. I’ve tried to get into a regular pattern of analyzing deals, and I’m at a point where some outside feedback on my numbers would be really valuable.

In terms of location, I currently live and work in downtown Boston, and I’m primarily looking to buy in Dorchester or Chelsea. I wouldn’t rule out other parts of Boston proper (though I’m guessing I’m priced out) and communities just north of Boston (e.g., Everett, Malden, etc) are on the table as well. Further out, Salem is also appealing.

I’m pretty realistic about the state of the market in the Boston area, and that it's tough to find anything that cash flows or allows you to live purely rent free. That being said, if I could find something that would cash flow if it were fully rented, and at least take a bite out of my mortgage payment while I’m occupying 1 unit, that would be a pretty significant improvement over my current reality of renting.

Anyway, here are some numbers for a 3 family I came across pretty recently that looked interesting.

• Initial investment = $550,000 (mortgage $440k, putting 20% down)
• TTL income = $5,300/mo (units 1 & 2 are 1BRs I estimate would rent for $1,500 each, unit 3 is a 3BR I estimate at $2,300)
• Debt Svc & Expenses = $4,605/mo (debt svc @ $2600, prop mgt @ 11%, vacancy @ 8%, repairs @ 8%, capex @ 5%, + reasonable amts for heat / hot water / water / snow removal / landscaping)

This nets out to $695/mo in cash flow with all three units rented, or -$250/mo if I’m occupying one of the 1BR units and managing the property myself while living there.

I’m mainly wondering if my analysis looks sound, and in general, if this looks like a worthy deal to other folks who have experience in the Boston area. (It looks better than most of the properties I’ve seen lately from where I sit, and it seems like a worthy move in contrast to my current reality of paying $2,400/month in rent.) 

Any thoughts or feedback would be hugely appreciated!