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Updated 3 months ago on . Most recent reply
![Caleigh McDonough's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/2865305/1698456327-avatar-caleighm.jpg?twic=v1/output=image/crop=905x905@47x0/cover=128x128&v=2)
House Hacking My First Property that Doesn't Cash Flow
Thank you for taking the time to read my post! I am thinking of moving from AZ to Charlotte, NC May 2025. I found a new build I like and in my price range while visiting Charlotte this weekend. I plan to purchase the property with 5-10% down, live in it for a year or two with a roommate, then rent it out full-time and repeat! (at least for the first few properties) I do not need cash flow in the short run but my ultimate goal would be to retire early from my investment properties.
I know Charlotte is growing, so I'm hoping for some appreciation long-term and I know cash flow can be harder to come by these days. However, after running the numbers accounting for insurance, PMI, taxes, vacancy, capX, property manager, etc. the property is estimated -1.85% cash on cash return (-$600/mo) once I fully rent the property. To be conservative, I assumed rents will be on the lower end of the spectrum. CoC just about breaks even if I assume rents are on the higher end of the spectrum.
My questions are:
1. Should I wait until I can put 20% down on a property to decrease the monthly mortgage payment? I believe this is one reason none of the deals I analyze are cash-flowing.
2. Are any <$350k single-family deals cash flowing in Charlotte? Again, not my main goal but it also doesn't seem wise to be short $600/mo.
3. Anything else I should be thinking about? I typically wouldn't look at new builds but it seems to be very reasonably priced. The community is new and secluded with trees but is NW of Sugar Creek & SE of Oakdale.
Happy to provide any more context!
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![Caleigh McDonough's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/2865305/1698456327-avatar-caleighm.jpg?twic=v1/output=image/crop=905x905@47x0/cover=128x128&v=2)
Quote from @Rick Albert:
The challenge is going to be qualifying for each property.
So you are negative $600 a month on the first one, you will need to have the personal income to cover it and then still buy the next one.
A couple of thoughts:
1. Does the builder have any incentives to work with their chosen lender? For example they will buy down the interest rate.
2. Do you need a property manager? Manage it yourself to get the experience. PMs are actually very expensive. They typically charge to find a new tenant, renew leases, and upcharge on maintenance. So when they say they charge 10%, it is really 15%-18% of the gross rents.
3. You should put money away for cap-x and repairs, but also look into detail on the builder's warranty. For example in California there is a 10 year structural warranty by law (and shorter warranties for different systems). Maybe you can tweak the numbers since it won't be immediate.
I hope this helps.
Thanks!
Hi Rick - That definitely helps! The builder does have incentives that I already priced in. I reran the numbers without a property manager and its still a few hundred negative. That's good to know for future analysis that a property manager is more than 10% though!
I was thinking of maybe lowering capx the first few years because of those warranties but wasn't sure if that was frowned upon.
I'm going to look for a different property but you gave me a lot to think about. Thanks!