All Forum Posts by: Account Closed

If you are spending less towards your mortgage than you are in rent I think it can be a real win. When it comes to getting tenants, It always makes my clients nervous when they haven't done it before. I would connect with a house hacking realtor in the area and get an idea of what your units will rent for. 6months of the mortgage in savings (or a safety net from retirement or family) would also be a good idea to mitigate the risk of it taking a little time to find tenants. 

House hacking is tough to cashflow in year one (with current house price run-ups and interest rates) for a couple reasons:

1. You are living in one of the rentable units

2. You are only putting 5% down so your loan amount is much larger and therefore your mortgage payment.

I would consider your net worth ROI. What I mean by this is considering how much your down payment returns to your net worth (appreciation, loan paydown, tax benefits, AND rent avoidance). Don't forget to include rent avoidance in your numbers! You have to live somewhere.

You may need to lower your return or cashflow expectations so you can get into a house hack that will allow you to avoid throwing rent money away every month. You know this, but don't forget all the other ways real estate makes you money. Paying down your mortgage and owning an asset that will appreciate over the long term.

I think it would be good to set expectations.

With today's values and interest rates, it is unlikely you will live for free in a house hack for the first couple of years. You also need to factor in tax savings and the biggest of all...it is still likely better than renting.

Keep in mind if the numbers worked with a low down payment, why wouldn't someone putting 20% down snatch it up?

The Mello Roos can be a deal killer. I would compare it to other options that don't have it and see what makes more sense. For example I have clients who bought in Palmdale with a Mello Roos, but we noticed the neighborhoods were significantly nicer and therefore worth it. Plus the property had major future rental potential. 

Plus at $850/month, could that money be put to better use like buying a house? That's around another $100,000 in mortgage buying power. 

Negative cash flow does not make sense unless you are house hacking. 

Negative cash flow is never something you should do even if you could afford it. 

@Brianna T.

If you cannot afford it without renters then I would not buy it.