Hi @Dominic Holt
I house hack in an expensive area (North Shore of Boston). A few tips I think would transfer to your market.
-I would look for 3's and 4 unit buildings. Your out of pocket cost should be lower.
-If looking at 2-family buildings, I would go for properties that have more bedrooms. Typically a 3 bedroom unit will get higher rent than a 2 or 1 bedroom. If you live in a 2 plus bedroom unit, then you can rent out your extra bedrooms to bring down the cost
-You mentioned in an example of coming out of pocket $1400 after collecting rents. Is the $1400 drastically lower than what you are paying now in housing? If not, then you are correct that it probably wouldn't make sense.
-You mentioned that other neighborhoods have higher priced homes at around $650k. Are the homes at $450k in the path of progress? Will they appreciate in value over time to that level? That doesn't necessarily help with your monthly costs, but long term it could help your wealth building journey.
-Value add is also another way to force appreciation. Can you buy a home that is a little bit of a fixer upper? Maybe at a lower price point? Being able to force appreciation can help you get to the 20% equity mark, and therefore drop your PMI, which will lower you monthly and out of pocket cost.
-I know the spirit of house hacking is to put as little down as possible. But instead of 5%, could you put 10% down (or something to that affect)? More upfront out of pocket, but could lower your continual monthly cost.
-Could you raise the current rent for the other unit? If you are not at market, try to get those rents to market as quick as you can. Rents tend to go up over time, so you should be able to bridge the gap.
Again, not knowing your market, I think these strategies could help. For me, the goal of house hacking is to drastically reduce housing expenses first and foremost. Sometimes it is a grind to get to the optimal out of pocket cost, but stick with it if you see a path to lowering costs. If you are paying the same amount or more than your current rent, then it is probably not worth it, if house hacking is the strategy.
Hope that helps!
