Need Some Help Analyzing This Deal

[Account Closed]

Hi everyone, I want some advice on a house I am looking at. It is a new build in Nashville, TN and is in an "up and coming" neighborhood, about 4 miles from downtown. When I went to the property in person, you could tell the area used to be rough, but has been overtaken by new builds and higher-income residents. I did a deep look into crime around the area and nothing too horrible came up. It is improving rapidly and the home prices have been reflecting that. There is a new development project happening not too far away from the property and I truly expect property values in this area to soar, as it becomes more "livable" for people.

I believe that I can add value in this situation by purchasing the property in a neighborhood that most aren't willing to move into yet, but eventually will based on proximity to downtown. It is going for $380k and I planning to use an FHA loan that would cost me $2325/month. If this property was in a nicer area, you probably wouldn't be able to get it for under $500k (?rough guess).

However, when looking at rent comps I see most going in between the range of $700-$800 and would consider $700/month a safe estimate. However, I think I can be more aggressive with asking for rent because I have a decent network from college and can offer a private bathroom/bedroom with fellow chill young professional roommates. I already have a friend willing to pay $800 + utils.

My problem with this is that I went into house hacking focused on producing a slightly positive/break-even cash flow. While I never wanted to make a ton of money off it and was willing to pay a premium to avoid rehabbing(I work 50-60 hrs/week in another industry), I am not sure if I am talking myself into making a dumb decision. I honestly believe the worst case scenario of this deal will put me in the red monthly by $500 max (still def less than the rent I pay now lol). But I see potential in the area and want a piece of that market as a longer-term, appreciation play (I know its the risky option), so I am conflicted. It is hard to find anything much cheaper in this area suitable for house hacking that doesn't require a ton of work.

Thanks for your time.

[Christopher Phillips]

@Account Closed

House hacking is a little different than regular rental properties since it isn't always easy to get positive cash flow on a duplex with a new purchase carrying a loan...

The only way to look at it is cash flow if both parts are rented, assuming you can in your area. Then look at the numbers with the rental income and compare that to how you would live on your own without rent.

You also have to ask yourself, would you live into this area even if you weren't looking for house hacking.