All Forum Posts by: My Nguyen

If you bought for $150k then you refinance down the road at say a 5.5% rate, your cash flow would be about $112 per month in the beginning and bump to $278 after the refi.

$112 per month is a pretty awful return on ~$35k cash invested. But after the refi the return is great.

You ran your numbers well, you're accounting for everything.

The biggest issue here is that to me the deal only makes sense if rates come back down to the mid 5% range in the next couple of years and you refinance. Nobody has a crystal ball. Nobody knows if that will happen.

Sounds like you're being conservative in your underwriting- that's wise. Offering a lower price makes sense, as well. 

As far as the management fee- is it the best decision to pay that monthly as opposed to self-managing considering the cash-flow (or lack thereof)? Is this an OOS investment? Otherwise, self-management is definitely your best move.

If you are paying an HOA Fee, you might be able to project less maintenance, management costs etc. depending on what the HOA provides.

For the house hack I also want to add, you should let your CPA know about your "home office". Square footage even in the portion of the house hack you live in.

+1 all great advice here. I did the same thing. I had a guest unit & the main house, so I did a square ft split for expenses. The guest unit was 252 square feet. Main house 1676, so I deducted 1676/1928 of expenses as business expense. 

Talk to a CPA! They'll know best. 

I house hack a duplex, but live in the bottom unit. I'm able to take depreciation on 50% of the property for the time being. 

@My   here are some things to consider with your taxes

1. Use an accountant to file your taxes. They are worth every penny.

2. While I lived in my house hacks I was able to depreciate the percentage of the square feet of the home that was occupied by my tenants.In addition to depreciating that percentage, you can also deduct expenses, that are for the whole house, at that same percentage above ( repairs, supplies, etc.). This was while I lived there. Once I moved out (to the next house hack) I was able to start depreciating the full value and deducting all of the expenses.

3. Make sure you talk to your accountant about Qualified Business Income Deduction (QBID). It basically allows for your first 20% of rental income to be tax free.

@My Nguyen

Yes, I think @Lawrence Potts is correct. You can only depreciate the portion that you are not living in.

I believe you can depreciate any percentage of the home you do not personally use. Any part that is rented out can be depreciated. For example: I live in a 4plex and live in one unit, so I am able to depreciate 75%.

If you are house hacking a SFR then it gets a bit tricky because you are dealing with shared spaces (bathroom, kitchen, etc.). So I'd connect with a cpa for that part, but my guess is that you'd only be able to depreciate the sqft that you do not use (bedrooms). Hope that helps!