House Hacking ROI Calculator

House hacking is a real estate strategy where you purchase a multifamily property, live in one unit, and rent out the other units to offset or eliminate your housing costs. Common property types include duplexes, triplexes, and fourplexes. Because you occupy the property, you can qualify for owner-occupied financing with as little as 3.5% down through FHA loans, which offer more favorable terms than investment property loans.

Rental income from tenants reduces your net monthly housing payment, which is the mortgage, insurance, taxes, and maintenance minus rent collected. In favorable markets, rental income from other units can cover most or all of the mortgage payment, letting you live nearly rent-free while building equity. This calculator shows your net monthly housing cost at various occupancy and rent scenarios.

As a landlord, you can deduct the rental portion of property expenses including mortgage interest, property taxes, depreciation, maintenance, and utilities proportional to the rented square footage. Depreciation is calculated over 27.5 years for the rental portion only. Living in the property does not disqualify you from these deductions. Consult a tax professional to correctly allocate expenses between personal and rental use.

Living next to tenants can create privacy and lifestyle challenges, especially in a duplex. Vacancy periods reduce rental income without reducing your mortgage payment, compressing your budget. Tenant problems and maintenance issues become more immediate when you share a building. Having reserves of three to six months of expenses protects against vacancies, unexpected repairs, and problem tenants. Thorough tenant screening is critical.