House Hacking with Current Interest Rates

[AJ P.]

I'm so intrigued by the idea of house hacking and want to take advantage of being able to use such little capital in order to get more and more properties under my belt, but I was wondering if anyone is out there having success given the current state of the market? I've seen many posts that opportunities really vary depending on location, but I just don't know how you can find something that cash flows or even comes close given rates. It seems as though the only way to get a return right now is to buy something in full and then refinance in a couple years when hopefully rates are lower and you can redeploy that equity again. I know investing is a marathon and not a sprint, but with house hacking in particular you get locked into one year windows. I want to start that window ASAP and continue to repeat as much as I can. I really appreciate any insight anyone might have to share!

[Noah Bacon]

Hi Aj!

Are you analyzing the deal as a rental after you move out, or just while you are living there?

It is certainly tougher now to be cashflow positive on a house hack, but is definitely not impossible. On my first house hack a few years ago, I was told that I would not be cashflow positive while house hacking. I was cashflow positive while living in the property and knew I would cash flow even more at my move out. For my second house hack, rates and values went up and I was cashflow negative while living there and am actually slightly cash flow negative moving out of the property. 

Though it is a negative cashflow move in the short term, I fully anticipate rental rates to catch up to the expenses in about 3-4 years and break even monthly. If you are currently renting, I don't see any alternative aside from house hacking where your monthly living expense can be turned into an investment.