How to run the numbers on a House Hack?
Cassandra M StantonPro Member
Saint Petersburg, FL · Member since 2025 · 9 posts · 9 votesHow to run the numbers on a House Hack?
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Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
4moAfter 15 years of investing I am more of a "gut feel" buyer than running numbers. There is a financial reason for that: year 1 cash flow is a pretty poor metric for long term performance. So I think you did the right thing, you bought something that is desirable, will likely rent better, appreciate better and maybe one day sell better.
If you want to run numbers, just use both units fair market rent. A quality property will usually just barley break even, the more junk you go, the better the cash flow looks, never mind that long term capex waiting to catch up with you ;-)
12 Replies
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes4mo
After 15 years of investing I am more of a "gut feel" buyer than running numbers. There is a financial reason for that: year 1 cash flow is a pretty poor metric for long term performance. So I think you did the right thing, you bought something that is desirable, will likely rent better, appreciate better and maybe one day sell better.
If you want to run numbers, just use both units fair market rent. A quality property will usually just barley break even, the more junk you go, the better the cash flow looks, never mind that long term capex waiting to catch up with you ;-)
- 4moG. Brian DavisPro MemberInvestor · Hatboro, PA · Member since 2016 · 2k+ posts · 853 votes
Hi @Cassandra M Stanton, nice to meet you here on BP! With house hacking, I’d underwrite it as if you were going to move out and rent the whole property in year two. For year one, just be honest about your “net cost to live” after rent. If that number feels like a win compared to what you’d pay anyway, that’s fine.
- New to Real Estate · Atlanta, GA · Member since 2026 · 11 posts · 6 votes4mo
Same boat here. I've run maybe 15 duplexes through the BP calculator and nothing cash flows if I plug in all the textbook numbers. But what finally clicked for me is that the real comparison isn't whether it cash flows on paper, it's what you're paying to live there vs what you're paying now. If my rent right now is $1,850 and a house hack drops that to $600 with someone else covering most of the mortgage, that's over $1,200 a month I'm keeping. None of the calculators really frame it that way though.
- 4moRaymond J. RodriguesBusiness MemberLender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
@Cassandra M Stanton reach out to @Josh Green. He has helped a ton of people do house hacks in the area and I am sure he can help you as well!
Helm Mortgage Corp.5127 Reviews - 4moJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votesHey Cassandra, with house hacks it’s definitely less “clean” than a straight-up rental, so the way most investors underwrite it is by breaking it into two lenses at the same time. First, treat it like a normal rental on paper: estimate total gross rent from all rentable units (main + ADU), then subtract realistic vacancy, repairs, capex, taxes, insurance, and a property management fee even if you plan to self-manage, just to keep the numbers honest. That gives you the property’s true income potential. Then the second lens is the house hack angle, where you compare your actual monthly out-of-pocket cost (mortgage, taxes, insurance minus rent collected) to what it would cost you to rent a similar place you’d actually choose to live in. A “good deal” in house hacking usually shows up when your lifestyle housing cost is meaningfully reduced or near zero while you’re still building equity, even if the pure cash-on-cash return isn’t amazing in year one. The mistake a lot of people make is judging it only like a pure investment, when in reality it’s part investment, part subsidized living situation. If both sides look reasonable and the property still works under conservative rent assumptions, that’s usually a strong buy for a next step.
Quote from @Cassandra M Stanton:
Hello BP Forum!
Relatively new to House Hacking here! This past year my partner and I bought our first one as a 2 bed/2 bath turnkey SFH with a 60 sq ft 1 bed/1 bath ADU with a completely separate entrance and yard. We are LOVING it so far. The rent covers more than half of our mortgage and we love our MTR tenants. We bought this first hack purely on emotions (didn't know BPs before) but now we'd like to buy another after we've lived here a year.
My question is - how do you run the numbers when its not as clear cut as a regualr rental property? How do you know you're getting a "good deal" when you will likely be paying for some of the mortgage on your own for the first year? We love the house we bought but want to do it right next time and not just buy it because we fell in love with it!
Thanks!
Jimmy Lieu, Red 1 Realty4.9120 Reviews - 4moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
Quote from @Cassandra M Stanton:
Hello BP Forum!
Relatively new to House Hacking here! This past year my partner and I bought our first one as a 2 bed/2 bath turnkey SFH with a 60 sq ft 1 bed/1 bath ADU with a completely separate entrance and yard. We are LOVING it so far. The rent covers more than half of our mortgage and we love our MTR tenants. We bought this first hack purely on emotions (didn't know BPs before) but now we'd like to buy another after we've lived here a year.
My question is - how do you run the numbers when its not as clear cut as a regualr rental property? How do you know you're getting a "good deal" when you will likely be paying for some of the mortgage on your own for the first year? We love the house we bought but want to do it right next time and not just buy it because we fell in love with it!
Thanks!
There are MANY spreadsheets, available via Google, that help you analyze a rental property.
You'll just need to research & understand the variables:
1) Vacancy
2) Maintenance
3) Cap-Ex (which I personally ignore)
4) Improvements
5) Any utilities, lawncare, etc., that you choose to coverOne issue many newbies initially struggle with is running the numbers on a lot of properties that don't cashflow.
Well, you really want to lean to run the numbers backwards - start with the market rents and figure out what price you can pay to cashflow. THAT"S THE AMOUNT YOU OFFER!
Yes, sometimes your offer number will be waaaaay below asking price and an agent won't submit it. That's when you need to learn to say - NEXT😊!
Logical Property Management4.9458 Reviews - 4moRyan SpathBusiness MemberReal Estate Agent · Boise, ID · Member since 2017 · 562 posts · 376 votes
Welcome to Bp and congrats on the successful househack. A “good deal” is subjective to each person, first define what this means to you. Are you snagging the 2nd property with a 5% conventional loan? If you are a good deal may be getting a duplex or another single with Adu that provides the following: You will want to underwrite it such that when you move out the property stands on its own. Meaning it pays for itself, covers vacancy, repairs, capex. Once you know this it becomes more clear with a deal is for you. A quick glance at your market, the accusation cost is high and so are the taxes and insurance. I would find an investor friendly agent that is familiar with the area and have them guide you, look for meet ups and tell folks what you are looking to do. RE is a relationship business and the better the relationships you have the better you will do.
- 4moKyle HendricksPro MemberLender · Member since 2021 · 170 posts · 74 votes
Congrats, that is so exciting! Me and my wife did the same thing and the MTR strategy has been huge. Househacks are a little harder to analyze because you are actually living in it, and quality of life is a metric you can't really track but is sooo important.
How you plan to structure is huge too, 2-4 unit, or another SFR with ADU, down payment, mortgage pmt, etc. For househacks, I love it if it allows you to live for cheap and then at least a breakeven after mortgage, capx, vacancy, reserves.
I am a lender that specializes doing househacks for clients nationwide and I love prioritizing quality of life because then worst case, if you have to live there longer than you want, you are still living for cheap, and in a place you love. (Which is an amazing worst case scenario lol)
Feel free to reach out as well and happy to help however I can!
- 3moTre DeBragaPro MemberReal Estate Agent · Worcester, MA · Member since 2022 · 107 posts · 48 votes
Great position to be in. For the next one, treat the rental unit like a straight investment property first.
Pull market rents from HUD's fair market rent data or Zillow/Apartments.com to see what the unit can realistically fetch. Then run it through the BiggerPockets calculator — plug in your mortgage, property taxes, insurance, and don't forget maintenance, CapEx, and vacancy. People skip those and wonder why the numbers don't hold up later.
Whatever gap is left between the rental income and your total payment is your effective cost to live there. The goal is subsidized living plus equity — not necessarily traditional cash flow.
The BP calculator makes this pretty straightforward once you have your numbers dialed in. Know your property taxes going in — in some markets that alone can make or break a deal.
- Tulsa, OK · Member since 2026 · 8 posts · 4 votes3mo
Congrats on the first one, sounds like it's doing its job. The trick for deal #2 is to stop letting the live-in part flatter the numbers.
Underwrite it as a straight rental as if you've already moved out. Run all the units (or the ADU) at market rent against the full mortgage, taxes, insurance, and a real expense load, and see if it still works when you're not living there. If it cash flows or close to it on that basis, it's a real deal. If it only works because you're covering a chunk of the mortgage while you live there, that's a temporary subsidy, not a good deal, and you'll feel it the day you leave.So treat the live-in discount as a bonus on top, never the thing that makes it pencil.
For the MTR/ADU side specifically: don't plug in a full 12-month rent number. Mid-term has vacancy between tenants and furnishing/utility costs a long-term lease doesn't, so haircut the gross and underwrite on what's realistically booked, not best case. Same trap people hit with short-term.
Quick gut check I'd use: would you still buy it if you had to rent out the unit you're living in today? If yes, it's a deal. If no, it's a house you like with a tenant helping out.
Happy to run a specific one through that framework if you want to throw numbers at it when you're hunting for #2. - Lender · Tampa/Saint Petersburg, FL · Member since 2014 · 356 posts · 148 votes3mo
Hi Cassandra, first off, congrats on your first house hack! It sounds like you found a great setup and it's smart that you're thinking about the numbers more strategically for the next one.
The way I look at house hacks is to underwrite them as if I'm buying a traditional investment property. Assuming your long term plan is to eventually move out and rent the entire property, I want the deal to make sense as a rental.
Of course, there will always be some emotional component since you're living there, and that's okay. But from a pure investment standpoint, I want to know that if I moved out tomorrow, the property would still be a solid asset.
I also like looking at it from a "cost of living" perspective. If the property reduces my housing expense significantly while building equity and creating future rental income, that's a win even if it's not producing huge cash flow on day one.
Congrats again - you'll probably find the second one is a lot less intimidating now that you've already done it once. If you need any help on the lending side, would love to help out. I do have a lot of experience personally and professionally with house hacks/multi fam.
- Investor · United States · Member since 2023 · 26 posts · 22 votes3mo
Amazing! Love to see it! Coincidentally, our episode on the real estate rookie podcast (here at BP) just dropped today and is on this subject exactly! I agree with what Amber wrote above ^. It's important to remove that emotional component to ensure it's not blinding you from the story the math is telling. It's a 'good deal' if it works when you move out/without you living there.
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