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 :)