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//// Real Estate ยท House Hacking

House Hacking ROI Calculator

Buy a duplex or small multi-family, rent out the other units, and let your tenants pay your mortgage. Enter the property details and rent to see your effective monthly housing cost, cash-on-cash return, and break-even rent per unit.

Where this fits

๐Ÿ  Real EstateHome BuyingHomeownersHouseholds

This tool lives inside Home Buying and is most useful for homeowners and households.

30yr Fixed Avg~6.8%
Standard Down20%
DTI Limit (QM)43%

Housing Cost Comparison

Without House Hacking

$2,465/mo

Full mortgage payment

With House Hacking

$1,499/mo

Save $966/mo vs. renting elsewhere

House hacking saves $966/mo โ€” that's $11,592/year your tenants pay toward your housing.

Property Details

$
%

= $20,000 down

%

Rental Units

Units you rent out (not your unit)

$
%

Default 8% (industry rule of thumb)

%

Default 30% (maintenance, tax, insurance)

%

= $12,000

Your Monthly Cost

$1,499

vs $2,465/mo full mortgage

Monthly Cash Flow

-$1,499

-$17,984/yr

Cash-on-Cash Return

-56.20%

On $32,000 invested

Break-Even Rent/Unit

$3,827

Makes your housing free

Year 1 Equity Built

$4,050

Principal paid in year 1

Monthly Savings vs Solo

$966

$11,592/yr

Monthly Cash Flow Waterfall

Gross rental income (1 unit)+ $1,500
Vacancy (8%)โˆ’ $120
Operating expenses (30%)โˆ’ $414
Net operating income$966
Mortgage paymentโˆ’ $2,465
Net monthly cash flow-$1,499
Your effective housing cost$1,499/mo
1

Step 1 โ€” Monthly Mortgage Payment (P&I)

PMT = P ร— (r/12) / (1 โˆ’ (1 + r/12)^โˆ’n)

P = $380,000, r = 6.75%/yr, n = 360 months

= $2,465/mo

Loan: $380,000 ($400,000 โˆ’ 5% down). Does not include property taxes or insurance (PITI). Actual payment will be higher.

2

Step 2 โ€” Gross Rental Income

grossRent = rentalUnits ร— avgRentPerUnit

1 unit ร— $1,500/mo = $1,500/mo

= $1,500/mo gross

This is your rental unit income before vacancy and expense allowances.

3

Step 3 โ€” Vacancy & Operating Expenses

effectiveRent = grossRent ร— (1 โˆ’ vacancyRate); expenses = effectiveRent ร— expenseRatio

effective = $1,500 ร— (1 โˆ’ 8%) = $1,380; expenses = $1,380 ร— 30% = $414

= $966/mo net operating income

Vacancy allowance: $120/mo. Operating expenses (30%) cover maintenance, insurance, taxes, utilities โ€” rules-of-thumb vary by market.

4

Step 4 โ€” Your Net Housing Cost

yourCost = monthlyMortgage โˆ’ netOperatingIncome

$2,465 โˆ’ $966 = $1,499

= $1,499/mo

Without house hacking you'd pay $2,465/mo. House hacking saves $966/mo ($11,592/yr). Break-even rent per unit: $3,827/mo.

5

Step 5 โ€” Cash-on-Cash Return

CoC = (annualCashFlow / totalCashInvested) ร— 100

annualCashFlow = 12 ร— ($1,380 โˆ’ $414 โˆ’ $2,465) = -$17,984; totalCashInvested = $20,000 + $12,000 = $32,000

= -56.20% CoC return

Year 1 equity built via principal paydown: $4,050. Total return is higher than CoC when including appreciation and equity.

Key insight

On a $400,000 property with 1 rental unit, your tenants cover $966/mo of your $2,465/mo mortgage. Your effective housing cost drops to $1,499/mo โ€” plus you're building $4,050 in equity in year 1.

Use this result in โ†’

Mortgage Calculator โ†’Rental Property ROI โ†’Real Estate Investment โ†’

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