Beginner Question REI

[Antony Munoz]

Hello, 

My name is Antony F. Munoz and I am new to Real Estate Investing, and I am currently working on my investment strategy. While doing research I stumbled upon the house hacking strategy and I am wondering if this is a good strategy. If you are from Portland Oregon(where I am currently located), is it possible in the area? I appreciate any and all advice/replies.

[Antony Munoz]

Originally posted by @Chace Fraser:

@Antony Munoz welcome! House hacking is an incredible way to ease your way into real estate investing while minimizing your living expenses. House hacking is a great strategy and works in any market. We're currently house hacking a duplex in SE PDX and our tenants are paying 70 percent of our mortgage payment. 

If you are using a low down payment option, it's not really realistic to expect to be cash flow positive while you’re house hacking and living in the property. However, if your house hack reduced your housing costs from $1,200 to $600 per month, would that not be a win? That would create an extra $600 per month of “cash flow” that you could save and invest in your next property. Keep in mind the property must cashflow after you move out for the deal to make sense (in most scenarios). When an investor is looking at being cash flow positive, they are typically putting down 20 percent or more. If you are in a high demand metro area, it's simply not realistic to expect to be cash flow positive if you are putting down 0-10%.

Now if that is all the capital you have, that is what it is. Is it better to keep renting than to buy? Typically it is better to buy. Better to build your own equity through the debt paydown, enjoy the tax benefits of ownership, and garner the equity of an appreciating asset. You just can't expect to cash flow on an initial purchase with a low down payment. Now with time and rent growth, what could be a negative cash flow property might very well become a cash flow king, but that takes patience.

Another way to increase cash flow would be renting out rooms in the unit you live in, either Airbnb or longer term.

And think of it this way too... if you house hack 3 properties, and then 1031 exchange them into larger properties you'll likely achieve finanial independence within 6-10 years.... just by house hacking.

Hit me up if you want to chat about different strategies to get started in the area and then how to responsibly grow your portfolio.

Hey Chase,

I really appreciate your response and offer! I would definitely like to speak with you further on the topic and strategies. 70% off of my payment sounds incredible to men I would like to always keep my expenses as low as possible. Since I am new to REI it is hard for me to understand what a good deal looks like because I do not yet know how to properly analyze a market. This was a great response, I wanna thank you for taking the time to leave me such a meaningful response! What is the best way I could reach you?