Questions about the Rental Calculator

Denver, Colorado
House Hacking
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Questions about the Rental Calculator

Jaclyn KingPro Member
Member since 2023 · 15 posts · 12 votes

I am utilizing the BP rental calculator for the first time. When I'm analyzing deals I'm seeing negative monthly cash flow.  However, my goal is to offset my own rent with the income.  For example, monthly rental income is $3,100 but expenses from the calculator show $3,727/month.  The calculator is showing -$627/month.

Does that mean the negative cash flow is what I will need still need to pay in rent each month e.g. $627? 

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Caleb Brown
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
7mo

With the negative $627 is that with you occupying a unit? If so then being in the hole $627 is normal with the house hack. As you said the goal is to reduce your monthly housing expense, paying $627 towards rent is way under so still worth it. When you occupy a unit you take away part of the income so the calculator will be skewed. I'd run numbers as you occupy and then when you move out down the road. 

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  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    7mo

    With the negative $627 is that with you occupying a unit? If so then being in the hole $627 is normal with the house hack. As you said the goal is to reduce your monthly housing expense, paying $627 towards rent is way under so still worth it. When you occupy a unit you take away part of the income so the calculator will be skewed. I'd run numbers as you occupy and then when you move out down the road. 

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  • Ryan SpathBusiness Member
    Real Estate Agent · Boise, ID · Member since 2017 · 571 posts · 378 votes
    7mo

    @Jaclyn King

    without seeing what you are seeing, yes it sounds like you will be paying the $627 a month to live in your side of the unit. If you are using this property as a stepping stone to acquire more properties later, be sure to analyze this one so that when you move out it cash flows. 

    [email protected]208-600-2814
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  • Eric DeNardoPro Member
    Real Estate Agent · Denver · Member since 2020 · 366 posts · 151 votes
    7mo

    @Jaclyn King, Yes, the negative cash flow is what you still need to pay each month. If you're already including your rent in the income. Add that amount to $627 and that will be your total monthly cost.

    Happy to go over it with you. I'm in Denver and house hack myself and have helped other househackers. 

    [email protected]
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  • Adrian Lammersdorf-SciollBusiness Member
    Realtor · FL · Member since 2020 · 234 posts · 101 votes
    7mo

    The goal with house hacking is to reduce your living expenses. You can accelerate it even more if you get a place with an ADU or a small multifamily and make the extra unit an air bnb. Doing the Air Bnb is the best way to get free living or even cash flow from your house hack.

    [email protected]561-305-2404
    Thomas Lynne Realty527 Reviews
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  • Jeff WhiteBusiness Member
    Realtor · Denver, CO · Member since 2016 · 278 posts · 371 votes
    7mo

    @Jaclyn King

    For your calculation, that is correct if you are calculating all the utilities, maintenance, vacancy, capex,  there is more to the cost than just mortgage.

    For any house hack, you want to look at it two ways: while living there and after move out. 

    While living there, the goal is simple - to reduce or eliminate your housing cost.  If you are paying $1,800 for a one bedroom right now, the goal would be to be lower than that in a house hack.  If you want to live for free, that is where being a little more creative or flexible will help.

    After move out, this is the most important number.  The goal would be to cash flow after renting out all units in a multi or all rooms in a rent by room house hack.  That is the sniff test, if it can cash flow after move out, then it is a good deal.  If it is negative, then it is a bad deal, pretty simple.

    Can you achieve higher than a $300 per month cash flow after move out, absolutely, but you will have to look at 2-4 unit properties - renting to market/Section 8 tenants or single family houses - renting rooms individually to achieve the highest cash flow.

    Either strategy works great, it is determining your time commitment and what you are qualified for.

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  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    7mo
    Yes and I’d say $627 is pretty good. I’d assume you’re paying a lot more so I’d consider this a successful house hack.
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    Brick House CPAs53 Reviews
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