Should I ‘house hack’ if I might move in 2 years?

[Tomthetiger]

1 year out of residency, currently make 400k, 160k in federal loans, 40k in retirement plan. I am looking to have a house close to the hospital, block shifts, and live elsewhere 2 weeks out of the month. I see duplexes selling for about 180k. This is a low cost of living college town where rental demand seems to far exceed supply based on my own search for a rental.

I am tempted to ‘house hack’ with one of these duplexes vs renting an apartment. My thinking is that I will use property management for the unit I am not occupying (no interest in dealing with potentially problematic tenants) and when I move on from this job I will just rent the other unit too. Mortgage looks like it will come to 800/month total, the rental has historically brought in 900/month. Real estate investment calculators suggest this would be a very ideal property to rent out, but obviously house hacking changes that. Is this a reasonable idea? Is there something I am missing?

[StateOfMyHead]

If you are interested in being a landlord it sounds like a great idea provided you have considered cost of wear/tear and these duplexs are relatively easy to sell when the time comes. I can't speak about having a property manager because I haven't ever used one but I'm not sure that means you won't have tenant hassles just that you won't have to deal with them directly. I'm sure others will write in with property manager experiences.

[Craigslist]

Where do people obtain historical rental rates? the ones off zillow, those aren't accurate?

[mamaham]

Where are you moving in two years? Out of state?

[MPMD]

i'm not a residential real estate expert but...

if mortgage is 800 and rent is 900 you aren't going to clear enough to cash flow this. one A/C repair and you lose a year's profit, to say nothing of vacancy etc. there is definitely no margin in there for a management company.

if they are ideal rental properties in a desirable area they wouldn't cost $180k, you're missing something.

[White.Beard.Doc]

I think he is saying each side of the duplex rents for 900/month, so total rent with an 800/month mortgage would be 1800.

Yes, house hacking the duplex would help some to build net worth, perhaps a 25% or 30% total annual return on a 36k down payment. Or even a 50% or higher annual return if inflation keeps up. But that is only 9k to 18k per year. Is that enough return for you to want to run a side business? When you are making good money and can invest in the market with zero hassle? The most important thing for success if you live on one side and rent out the other, is to invest not in the property, but to invest in the tenant. We like to think of our tenants as our partners in business. They pay down your mortgage, they help to maintain your house, they watch over the property. Tenant screening and placement is an art.

Don't get me wrong. I started the rental property thing when I was a young buck. We made money on every property we owned, some a good return and some a great return. The early purchases were as much an education as they were an investment. Fast forward decades and our real estate portfolio has 8-figures of equity and a very generous annual income equal to that of a very highly compensated physician. We currently have professional management for 96% of our portfolio, but I learned the ropes self managing in the earlier years. The 4% of properties that we self manage is done for tax purposes and that saved us a massive amount on income taxes in 2021.