Updated 11 months ago on . Most recent reply
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!
Most Popular Reply
In bold, this is just something you read from the yesteryears on this forum. This will not work unless you're capable of large subsidies once you hit property 3 or 4. By property 2, you'll be feeling it. Today's math is 10-15% down, and re-house hack every 3-7 years.
In italics, this is a fine goal but be realistic. This doesn't happen. You seem young so I'll give you some game.
Think about what income you need to TRULY retire or have financial independence. Think about the extra income you need on top of that to pay for retirement(if it's just quitting work early), medical bills, and unexpected expenses. Hint: it's not cheap. For simple math, let's say you were like 99% of the fruit cakes on this forum--- they'll say net $10k/mo. That's without medical fees and saving for actual retirement.
In 12-15 years, $10k/mo is really 40-50% MORE. Now if you're a young 25 year old, and you want to be really financially free at 40, 45. you'll need about 100% more than you think you need today plus medical fees and retirement savings. This is coming from someone to stepped out of W2 in their early/mid 30s, and I can tell you first hand it's not cheap and anybody that tries this really does not understand the reality of it.
To your other questions, cash flow is just a mechanism of leverage nothing less or more. In today's world you need to be about 28-35% down on properties to be gross cash flow positive, closer to 40-42% to be truly net cash flow positive(i.e 50% of your income goes to maintaining the property, other 50% is actually profit).
My recommendation is to buy ideally a 4/3 SFR that's a starter-friendly one in a good area, and rent it out by the room. Not a real MF. If that's too costly, a 3/2 & rent by room. Or if you got real cajonas, a 3/1 and add a bathroom then rent by room. You don't need to "make" connections in the area, no one is serving you they are serving themselves. Figure out what you want, then work backwards. Always protect yourself by enforcing contracts, and learning to say no.