How to house hack properly (Duplex)

Question

When house hacking are you looking for positive cash flow or enough just to pay of your mortgage. How do you properly run the number on a property I know it's a little different than a standard single family home. I can't seem to find the average rent for a duplex to get a number on how much I will be able to charge. I know after I leave the unit the cash flow will be much higher than with me living there.

Eliott Elias · Answer

It depends where I’m buying and what my strategy is. Ideally I like cash flow but if I’m executing a BRRRR I just need it to break even. Other than that 1% rule applies

Louis P Lessor · Answer

For me, I am looking to have the mortgage covered. Then as pointed out, I am investing what I would be paying in rent for the unit I live in into my LLC checking account to start saving for the following property. Every quarter I also invest in the property I live in, such as new carpets, gutters, etc., to continue increasing the property tax.

Feel free to reach out; happy to answer any questions.

Nathan Gesner · Answer

Cash flow.

Let's say you buy a property with four rentals. If all four of them rent out for $1,000 a month and it cash flows $100 a month, that's pretty good. But if you live in the unit, that's $1,000 you won't receive in rent, so it's $600 negative cash flow. You following?

HOWEVER...you don't live anywhere for free (even mom's basement costs you your dignity, right?). If you're living in one of the units, you should be charging yourself rent, and paying it, just like any tenant would. Since you're the Landlord, it's just a money shuffle, but it helps you remember that the roof over your head has value, you can better track numbers on the property as a pure investment, it helps you stay disciplined about setting aside money for the next investment, etc.

How to calculate cash flow: https://www.biggerpockets.com/...