House hacking an $495k duplex in Jacksonville
Do the numbers pencil out?
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Happy Sunday! This week we’re looking at a duplex house hack in Jacksonville, and evaluating whether it’s a good investment.
Here’s the duplex we’re looking at - it’s currently on the market for $495k and has two 2bd/2ba units.
Located in the Springfield neighborhood of Jacksonville, this property is close to UF Health Jacksonville, a major hospital in the area. We’ll assume that we purchase the property for its listing price. The property was built in 1922 but updated recently. We’ll assume we won’t allocate any money upfront for renovations.
We’re going to make the following assumptions:
20% down with a 30-year fixed mortgage at 7% interest rate
1.05% annual property tax rate (based on Jacksonville’s current rates)
$200/mo home insurance
5% reserve for vacancy
10% reserve for capex and repairs
2% annual rent and expense increase
We’ll assume that we live in a bedroom in one unit and rent out the spare bedroom and the additional unit. Both units are currently listed on Airbnb and have annual revenue of 22k each. Looking at long-term rental comps in the area, it looks like we’ll be able to get about $1.5k/mo for our unit and $800/mo for our spare bedroom.
Plugging the numbers above into our trusted house hacking calculator (reply to this email and I’ll send you the link!), we get the results below.
Each month, we're paying $3,268 for mortgage, insurance, and property taxes, and we're bringing in $2,300 from rent. Including the $345/mo expense for capex, maintenance, and vacancy, our net monthly loss is $1,313/mo. Our equity buildup in year 1 is $4,023 - if we add that to our total loss, our year 1 net loss comes out to $11,728.
These results don’t look great - we’re out of pocket more than $1k/mo, and there’s not really much that we could do to boost our rents. The property currently makes $1.8k/mo on Airbnb, but after fees and miscellaneous expenses it’s probably not much better than just a long-term rental. Being close to a hospital means there are probably a lot of travel healthcare professionals in the area, so putting the property on Furnished Finder or another monthly rental platform might have some of the upside of short-term rentals without the maintenance headache.
Would I buy this property? No. There’s not really many levers to pull to increase revenue here and close the gap between our expenses and our current rent roll. Jacksonville also has great rental options, so there’s not much upside to forcing ownership unless the numbers really work out.
Thanks for reading until the end. Catch you next week!