House hacking deal analysis - negative cash flow when moving out

[Shankar Sridhar]

Hey all,

I am from San Diego and looking for my first investment via House hacking. Looking to start with a FHA loan and 3-5% down.

I have looked at different properties, from condos to duplexes about the ROI when being owner-occupied and if rented out fully later.

I understand that its difficult in my market to cash flow when occupying a room/unit, but when moving out, it needs to be cash flow positive.

• This cash flow when having it as a rental property, do you typically include Capex/Maintenance numbers as well ? Because, most of the properties I see produce negative cash flow when allocating 5% for Capex, maintenance, vacancy and 10% for property management.

• Is it okay to have negative cash flow and relying on much better gains with appreciation and rent increase of San Diego market? If so, how much is the limit? 100,200$ ?
  
  Also can I factor in the possibility of removing PMI after 3-5 years by refinancing, which should free up some more returns.?

Thank you for your replies in advance :)

[Ali Boone]

Here's some general considerations for househacking-

https://www.biggerpockets.com/...

But more specifically to your question--run the numbers. You're going to be way more than $100-200/month negative cash flow in San Diego using an FHA. So step 1: figure out how negative you're actually going to be, and step 2: figure out exactly how much appreciation you would need for the property to actually be profitable.

Never go into an investment property just assuming profit...somewhere, from someplace. Know exactly how you plan to profit.