House Hacking

3 Replies

Hello All,

I am just starting out in the Real Estate Investing world.

I am looking for a duplex to purchase but I was wondering about the analysis part.

Is it okay to cover some of the expenses and not have a cash flow positive investment if you are living in one side. 

You want to calculate it as if you had rented both sides. Most likely you will NOT have a positive cash from in the long run if you live in one side, but as you probably won't live there forever, you want to know what it will cash flow when you DO rent both sides.

I am planning on doing this myself, so good luck!

Hey @Armando Mejia , as @Andrew Meyer explained, you will definitely want to run your calcs based on both units being fully rented to tenants (including vacancy factor).

Along with your PITI, you will also want to include all owner-paid recurring expenses such as water/sewer/garbage, an average maintenance expense (lawn, snow, general repairs), and long-term capital expenditures (new roof, furnace, etc).

Once you are happy with your approximate monthly/annual cash flow assuming both units are rented, it will be easy to compute what your required living expenses will be if you were to live in one of the units.

Be aware that typically a 3-plex or 4-plex will allow you to live for cheaper and cheaper in comparison to a duplex.

Interesting answers. Thanks for the feedback.

I am currently using a spreadsheet and I was running the calculation not including both incomes. I will go back in and readjust those figures and see if I can get better returns.

@Andrew Meyer good luck to you as well. Are you going to purchase a duplex soon?

@Rob Brautigam thanks for the feedback. I am assuming the ultimate goal would be to live rent free.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you