FHA House Hacking in Northeast

[Ali Khalid]

Hi All - looking to purchase my first investment home in the northeast area (currently living in northern New Jersey). I plan to use an FHA loan on a multifamily property and house hack for a year or two.

I was wondering if anyone had insight into which areas would provide good cash flow and or appreciation. I am open to NJ and CT

[Andrew Postell]

@Ali Khalid love the plan. House hacking is how I got started. Keep in mind that an FHA loan will have some restrictions on it when you get to the 3-4 unit space. But that's why the Conventional 5% down option works better there. Likewise, house hacking REDUCES my cost of home ownership.  You will NOT cash flow on any property that you purchase.  I'm not sure if anybody has said anything different but I need this to be your expectation.  Remember, you are occupying one of the units...it would be impossible to cashflow in that scenario.  Ok, maybe if you rented out each room and maybe did everything Short Term or something like that.  But if it's long term renting, then you won't cashflow.  But it will still allow you to afford a SIGNIFICANTLY higher price point than if you did not house hack.  

So, if real estate appreciates 5% per year, then a $500,000 will have $138,000 in value after 5 years and a $1million home will have $276,000 in value increase after 5 years.  That's higher our value, the higher the equity gain is - even if the % of gain is flat...the dollar amount is higher because the property is worth more.  That's how house hacking helps us gain wealth.  We certainly aren't gaining $276,000 with $200 of cashflow.  So, don't sweat the "no cashflow" thing.  

Hope all of that makes sense.