House Hacker Question: Paying the same amount owning vs. renting

[Benjamin Sulka]

Hey BP house hackers,

Actively making offers on house hack deals in my area and want to get your thoughts on something. 

Many of the properties in more desirable areas (and higher potential for appreciation) would allow me to pay just about the same that I am renting right now after considering every expense under the sun (PITI, vacancy, PM, capex, maintenance, etc etc). In my area, that number is $1,450.

These properties would be just about breakeven if we decided to move out after one year.

Considering all of the other benefits of doing that first deal, do you think it's worth it? Would have somewhere between $17-20k total into this deal. 

Super grateful for any insight. 

-Ben, aspiring multifamily house hacker

[Anthony Swain]

Hey @Benjamin Sulka VERY soon to be house hacker,

MAN! I am rooting for you brotha. It sounds like you are very very close to your 1st deal. Personally, I am STOKED for you!

Anyway...

Here are my two cents. With these interest rates, if you can find a house hack situation that you are paying the same, slightly less, or I'd argue even slightly more, then I think it can be worth it for these reasons.

1) You will get to live in your preferred location. I think this gets down played, but getting to live in your desired location is a HUGE factor. Maybe you will have a closer commute to work, maybe you're closer to parks, favorite restaurants, interesting events, etc. The increase on your quality of life is hard to measure, but easy to feel. 

2) As you mentioned, APPRECIATION will most likely be higher in more desirable areas. As a house hacker, you'll benefit from this, especially utilizing leverage with a low down payment. For example, if you buy a $200k house with 5% down (10k) and the house appreciates by 5% (10k), then you get 100% of that equity increase. Year over year this can really add to your net-worth & equity position. 

3) If the property comes close to breaking even with you moving out, then it can still be a good deal. Interest rates will likely come down, so you can refinance to a better rate. On the other hand, if interest rates stay the same or go up, then you'll be happy you didn't wait around until they did. 

Rents will likely go up over time as well.

You can also get creative to increase the income by doing MTR, STR, rent by the room, etc.

4) Loan amortization will increase your networth over the next 5, 10, 15 years+. 

Keep at it Ben. So stoked to hear when you nail your first deal!

-Ant