All Forum Posts by: Trevor Brouelette

I’ve been underwriting deals this month with a goal to analyze 5 properties using an Excel model I built. I recently ran the numbers on a 4-unit property using two strategies:

1. Traditional buy and hold

2. House hacking (living in one unit)

What I found surprised me:

The cash flow was actually worse when house hacking!!!

At first, this seemed backward, but it made sense after I thought it through. When house hacking, you’re giving up one unit’s rent, which drops the property’s gross income and overall cash flow. But on a personal level, you’re saving a ton by living for free or at a reduced cost — it’s basically trading property cash flow for personal cash flow.

Now I’m considering bringing in a private lender for my first deal, and it raised a question: 

1. Wouldn’t house hacking reduce returns for a passive investor or lender?
2. Since the rent from one unit is gone, the investor doesn’t get compensated for my personal living benefit. The deal is better for the person living in the property, but not necessarily for the investor.

Curious how others have handled this. Have you structured a house hack with private lenders involved? How do you fairly compensate the investor when house hacking lowers rental income?