New to Real Estate · Killeen, TX · Member since 2023 · 19 posts · 24 votes
The way I see it, a brand spanking new duplex wouldn't be the smartest deal because of the high purchase price and you'd likely not cash flow, if not be in the negative. But is it better or worse than not buying anything at all? I'm really just curious if you can ever go wrong with house-hacking.
In my mind, pretty much anyone who buys a duplex or any multi-family home is either a RE investor or an aspiring RE investor and brand new duplexes, what I would consider not typically the best/smartest deals, are still being purchased left and right. I'm wondering if there's something I'm missing here. I'm trying to make sense of it- I guess if you held on to something like a brand new duplex, over time, especially after you move out after a year or so, you'd eventually cash flow positively due to increasing rents.. Yeah?
When I have house-hacked, I never cash flowed. I would get very close to breakeven, but you are still living for practically free (not counting repairs, maintenance, and management) while paying down the mortgage on a monthly basis.
I have never purchased a new property to house hack, but I would run the numbers like any other investment property. Usually, it makes more sense to house-hack older properties that you can update, add value to, and increase rents.
When I have house-hacked, I never cash flowed. I would get very close to breakeven, but you are still living for practically free (not counting repairs, maintenance, and management) while paying down the mortgage on a monthly basis.
I have never purchased a new property to house hack, but I would run the numbers like any other investment property. Usually, it makes more sense to house-hack older properties that you can update, add value to, and increase rents.
Investor · Austin, TX · Member since 2022 · 50 posts · 45 votes
2y
The type of home (multi or SFH) you buy doesn't make it a "smarter" or "dumber" deal. The easiest way to view it with Househacking is; the more uncomfortable you are willing to be, the more you can potentially cashflow RIGHT NOW.
Buying a duplex may offset living expenses, and may be a few hundred dollars cheaper than renting. This is very desirable since you can comfortably live with a girlfriend/dog/whatever, and not lose comfort.
Buying a SFH, building rooms, renting every room and sharing your room will almost certainly cashflow in most markets (outside of VHCOL cities). I personally am doing this, and cashflowing a few hundred dollars a month after expenses. I purchased with a 6.5% rate.
Either way, rents will increase and you will most likely cashflow in the future. Househacking is so powerful since you can lower your largest expense (rent), while learning to be a landlord and building equity.
Property Manager · Lansdale, PA · Member since 2021 · 826 posts · 1k+ votes
2y
If you are looking to cashflow while house hacking, you are going to be looking for much lower price points that will certainly come with many projects to update the property.
You can certainly go wrong house hacking, but the strategy should be one of most low risk tactics for newer investors as you are the landlord in the property you are also residing in. To me, it makes more sense to buy and be negative on the cashflow while you are house hacking. I would comp your property as if you are not living in it to get a better idea if you're going to have a good deal when you move out. Rental rates typically do rise YOY, but if you are using future rent projections it is a good idea to get a historical data of rent growth in the area you are investing in.
Realtor · Sacramento, CA · Member since 2019 · 242 posts · 152 votes
2y
Househacking is all about cutting down on your living expenses, and that means different things to different people. Some people are happy with one roommate and paying $900 less on their mortgage than they would living alone. Some people see it as a way to get into a multifamily house at a lower downpayment and interest rate, while still providing themselves a place to live.
I think the only way it would be "wrong" is if it puts you in a situation you can't afford or makes you "house poor".
My husband and I rent out 4 of the bedrooms in our house plus a bonus room, meaning we have 6 roommates, but our entire mortgage is covered. People would probably prefer a duplex because of privacy, and a newer duplex because of lifestyle/lower maintenance.
Real Estate Agent · Beverly, MA · Member since 2019 · 358 posts · 308 votes
2y
A lot of great information here. In my opinion, you can go wrong on ANY investment strategy BUT if you're thinking about investing in real estate house hacking is by farrrrr the most forgiving strategy. You need a place to live, right? Well, that takes off enormous pressure. What you specifically buy is totally your call. I am on my second house hack and to be honest, the first one was a much better deal and makes more sense on paper BUT I got exactly what I wanted in terms of spacing, layout, and location for the second so it checked off a different set of boxes.
I wouldn't compare yourself to big-time investors because they're buying up things so quickly and with cash for many reasons. Even if they know the numbers don't make sense they could be doing it just for straight-up tax purposes. They're a lot of reasons why someone buys real estate.
Always happy to walk through a scenario with you or chat about my situation!
I think if you're thinking about house hacking you're already better off than most. Just realize in this environment it;s different than it was a few years ago. Don't assume you'll live for free, unless you're willing to get real uncomfortable. BUT think about all the other advantages owning a property has.
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
2y
As a house hack, a brand new duplex could be interesting (my two house hacks have been fixers).
With brand new, there are a few factors to consider:
1. The latest finishes, floor plans, and overall feel in theory should be the latest and greatest, which looks great in a tenant's eye. When I moved out of my ADU and prospective tenants like the idea that they would be the first tenants to actually move in. It was a selling point.
2. Your capital expenditures should be low, especially if there is a warranty on the work.
3. Your time is valuable. With less maintenance, you could focus your time on other, higher producing activities.
4. Your lifestyle. House Hacking is a lifestyle. If you enjoy living there, while people are helping with the bills, then it could be a good move.
I'm not saying go for it, I'm saying that there are other ways to look at it. At the end of the day it beats renting yourself.