House Hacking Numbers: How to Tell If a Duplex, Triplex or Fourplex Actually Works

House hacking means buying a small multifamily (or a home with an ADU or rentable rooms), living in one part, and renting out the rest. Done well, your tenants cover a big share of your housing cost while you build equity and learn landlording at small scale.

Done carelessly, you end up paying more to live in a fourplex than you paid to rent an apartment, with a toilet to fix at 2 a.m.

The difference is almost always the numbers. Here's how to run them honestly.

The two questions that matter

A house hack has two lives, and you need to analyze both:

1. While you live there: what is your effective monthly housing cost, and how does it compare with renting?
2. After you move out: does the property work as a pure rental, with every unit leased at market rent?

A property that's great for question one and terrible for question two can trap you. One that passes both is a strong candidate.

Step 1: Get the full monthly payment (PITI and then some)

Start with a real lender quote, not a mortgage calculator's default rate. Owner-occupied financing often allows a lower down payment than investment loans, but programs vary, and mortgage insurance may apply.

Your monthly payment includes:

• Principal and interest on the loan
• Property taxes (look up the actual tax bill, and ask whether it will be reassessed after the sale)
• Insurance for a multifamily you live in. Ask your agent about the right policy type.
• Mortgage insurance (PMI on conventional loans, MIP on FHA loans) if your down payment is small
• HOA dues, if any

That's your PITI. Don't stop there.

Step 2: Count reserves, not just the mortgage

Owning a rental means costs that don't show up every month but always show up eventually:

• Vacancy on the units you rent out
• Repairs and maintenance
• CapEx (roofs, water heaters, flooring); see how much CapEx reserve per unit
• Utilities the owner pays (often water, sewer, trash, sometimes common-area electric)
• Management, even if it's zero while you self-manage

A common approach is to estimate vacancy, repairs and CapEx as a percentage of rent on the rented units. Choose conservative numbers for the specific property's age and condition.

Step 3: Calculate your effective housing cost

Effective housing cost = PITI + owner-paid utilities + reserves on rented units − rent from units you don't live in

Compare that with what you pay in rent today. That difference is the real monthly benefit (or cost) of house hacking.

Step 4: Calculate the move-out numbers

Now pretend you've moved out and rented your unit at market rent:

• Gross rent = all units at market rent
• Operating expenses = vacancy, repairs, CapEx, management (budget for it even if you plan to self-manage), owner-paid utilities, taxes, insurance, HOA
• Net operating income (NOI) = gross rent − operating expenses
• Cash flow = NOI − loan payment (principal, interest and mortgage insurance)
• Cash-on-cash return = annual cash flow ÷ cash you invested (down payment, closing costs, up-front repairs). See how to calculate cash-on-cash return.

A worked example (hypothetical numbers)

A triplex for $480,000, with 3.5% down, a 6.5% rate, mortgage insurance, $7,200/year taxes and $2,400/year insurance. You live in Unit 1. Units 2 and 3 rent for $1,450 each. Your unit would rent for $1,500. You currently pay $1,800 in rent.

While you live there:

• Total monthly payment (P&I, taxes, insurance, mortgage insurance): about $3,995
• Rent from Units 2 and 3: $2,900
• Reserves on those units (vacancy 5%, repairs 6%, CapEx 6%): about $493
• Owner-paid utilities: $250
• Effective housing cost: about $1,838/month

That's slightly more than the $1,800 you pay to rent now. You'd be building equity and gaining experience, but you're not "living for free."

After you move out:

• Gross rent, all three units: $4,400
• Operating expenses (vacancy, repairs, CapEx, 8% management, utilities, taxes, insurance): about $2,150
• NOI: about $2,250
• Loan payment (P&I plus mortgage insurance): about $3,195
• Cash flow: roughly −$945/month

This example is a cautionary one: fine-ish to live in, but it loses money as a rental at these numbers. You'd want a lower price, higher rents, a bigger down payment or a lower rate before it works on both tests. That's the point of running the numbers before you fall in love with the house.

The FHA self-sufficiency test (3–4 units)

If you're using an FHA loan on a three- or four-unit property, lenders generally apply a self-sufficiency test: roughly, whether 75% of the total market rent for all units (including yours) covers the full monthly payment. In the example above, 75% of $4,400 is $3,300, which is below the ~$3,995 payment, so it would likely fail. Your lender's underwriting is the final word; use this only as an early heads-up.

Factors that make or break a house hack

• Purchase price and rate. Small changes swing the whole result.
• Unit mix. Larger rentable units (or a separate ADU) often produce more rent per dollar of price.
• Separate meters. Owner-paid utilities on a whole building add up quickly.
• Condition. Deferred maintenance shows up as CapEx in year one.
• Your own lifestyle. You'll live next to your tenants. Be sure that suits you.
• Owner-occupancy rules. Owner-occupied loans usually require you to live there for a set period. Confirm with your lender.

Use a spreadsheet, and compare more than one property

Run every candidate through the same math and compare them side by side. The Rental Deal Analyzer ($19) handles the move-out rental analysis (cash flow, cap rate, cash-on-cash, DSCR), and the Loan Amortization & Payoff Tracker ($15) shows how fast you build equity and what extra principal does. A dedicated House-Hack Calculator ($19) (effective housing cost vs. rent, move-out cash flow, the FHA heads-up check and a three-property comparison) is available now in the Toolkit.

Once you close, track every dollar from day one with the free Single-Property Tracker. House hacking gets tricky at tax time because only the rented portion is a rental, so clean records are a must. Read Schedule E categories for landlords and ask your tax pro how to split shared expenses.

Quick checklist

• [ ] Real lender quote: rate, mortgage insurance, closing costs
• [ ] Actual tax bill and insurance quote
• [ ] Market rent for every unit, including yours
• [ ] Conservative vacancy, repairs and CapEx
• [ ] Effective housing cost vs. your current rent
• [ ] Move-out cash flow and cash-on-cash
• [ ] FHA self-sufficiency check (3–4 units, FHA only)

Want one practical landlord tactic each week? Subscribe free.

Save with a bundle

• Investor Pack ($39): Buy the bundle →
• Complete Landlord Library ($89): Buy the bundle →

This article is for general educational purposes and is not financial, lending or tax advice. Loan programs, mortgage insurance and qualification rules come from your lender. Example figures are hypothetical. — Jon, Everyone's Landlord