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Updated 3 months ago on . Most recent reply

User Stats

7
Posts
3
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Caleigh McDonough
  • New to Real Estate
  • Scottsdale, AZ
3
Votes |
7
Posts

House Hacking My First Property that Doesn't Cash Flow

Caleigh McDonough
  • New to Real Estate
  • Scottsdale, AZ
Posted

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!

Most Popular Reply

User Stats

7
Posts
3
Votes
Caleigh McDonough
  • New to Real Estate
  • Scottsdale, AZ
3
Votes |
7
Posts
Caleigh McDonough
  • New to Real Estate
  • Scottsdale, AZ
Replied
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!

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