Paying Off House Hacks

[Khalid Haynes]

Hello All, 

I'm leaning towards the strategy of house hacking and focusing on paying off the mortgage of the house within 5-10 years.   I'll be paying it off with my wife. We are 28 and on buying in about 3-4 years (we are saving right now). We are thinking of house hacking and only purchasing a property that could potentially cashflow  $1000 or more each month. Then we'll do another house hack and use the cash flow  from the paid off property and some of our income to pay off the second house hack - rinse and repeat - until we don't want to anymore. Our goals are to have a house or two to pass down to our children that is paid off and make some passive income on the side that will allow one for one or both of us to work part time rather than full time. I'm wondering if anyone here has taken this path or currently on it. Would love to hear insight. We'll mostly house hack in the nj area and be working in nyc. Thank you in advance for feedback.

[Scott E.]

This is a good strategy in concept. But the 2 biggest issues I see are...

1. You're going to have a hard time finding an entry level home that cashflows $1,000 per month or more. Even if you're talking about buying a fourplex, it'll be hard to find a property that cash flows half that right now with where interest rates are at.

2. Even though this strategy feels right today, 10 years is a long time. It's going to take a lot to stay disciplined with putting all of your extra cash every month into this house for that long. And who knows what your mindset will be in 10 years. You might move out of state. You might hit the lottery. You might change your investment objectives. You might have a really bad experience with a tenant and want out of the rental business. You might get divorced. You get my point... it's really hard to plan that far ahead.

Again I want to reiterate that in concept this is a great financial plan. And it very well may work out for you. But if I were in your shoes I'd take this long term plan and break it into shorter term goals (what do you want to achieve in the next 2-3 years?)