Future Duplex Owner – How Do You Evaluate Returns?

Question

• I'm based in Metro Atlanta and plan to buy my first house hack next year — ideally a duplex (always been a dream of mine, thanks to my favorite movie 😄).
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How do investors decide what a good return is before buying? I hear terms like cap rate and cash-on-cash — would love help understanding how you use them in real life.

Looking forward to learning with you all!

Tajana Reagan · Answer

Great tips — especially on vetting tenants and fixing up the owner’s unit. Thanks for sharing!

Jaycee Greene · Answer

Hey @Tajana Reagan, welcome to the BP Forum! Do you contribute to a 401k or other type of retirement/investment account?

Sean Graham · Answer

Welcome, Tajana! Duplex house hack is a great first move.

Quick rule of thumb:

• Cap rate helps compare markets/deals.
• Cash-on-cash shows how hard your invested cash is working.

Cap rate helps compare markets/deals.

Cash-on-cash shows how hard your invested cash is working.

Most investors pick a target (say 6–10% cash-on-cash) depending on goals and risk.

Ned Carey · Answer

@Tajana Reagan no I have never done a house hack. I was going to rent out a room in my first house but never got around to it.

Aaron Zimmerman · Answer

@Tajana Reagan absolutely. If you can break even while living there, that's incredible. It's just with todays interest rates and prices, it's a bit more difficult.

Key lessons:

1. Vet existing residents. The last thing you want is an eviction.

2. Carefully review inspection report to know what items you'll need to spend Monday on in the first couple of years.

3. Have plenty of reserves in case of any storms.

4. try to improve the owners unit while you live there to maximize rent upon move out

Aaron Zimmerman · Answer

The overall objective with the house hack is to lower your housing expense while you're there AND cash flow flow after all expenses upon moveout. You can use cash on cash return as well as total return. Once you move out, you can use return on equity.

Tajana Reagan · Answer

Thanks for breaking that down—it really helps clarify the difference. So it seems like cap rate is most useful before purchase for comparing properties, while cash-on-cash return becomes more relevant after the deal, once I’ve invested real money. That makes a lot of sense.

What types of expenses do you typically factor in before shopping? Just the basics like taxes, insurance, and estimated repairs—or do you go deeper with things like vacancy, maintenance reserves, or property management even if you’re self-managing?

Tajana Reagan · Answer

@Aaron Zimmerman I’ve heard that breaking even on a house hack while living there is still a win. I’ve honestly never considered planning for post-move-out cash flow, but that makes a lot of sense when looking at total return over time. I’d love to hear any key lessons you’ve learned from your own experience!

Ned Carey · Answer

@Tajana Reagan welcome to BP I see this is your first post.

A lot goes into evaluating a deal. Keep in mind that a "house hack" probably won't make you positive cash flow. It will lower your cost of housing and you can save and invest that money for the future. It is also an affordable way to get into real estate. You will be building equity and wealth that will pay off in time.

There are many posts her on how to evaluate deals. keep searching, reading and listening here and it will start to become more clear.

Future Duplex Owner – How Do You Evaluate Returns?

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