What Is House Hack Deal Analysis?
House hack deal analysis models a multi-unit purchase where you owner-occupy one unit. You project gross-rental-income from the other units, subtract vacancy-loss and operating-expenses, and compare to piti. The key output: mortgage-offset—how much of your payment is covered by tenant rent. A full or over-offset means you live for free or better. Use rental-comps and conservative-underwriting for rent and vacancy.
House hack deal analysis is the process of modeling a multi-unit purchase where you live in one unit—calculating mortgage offset, effective rent, cash flow, and whether the numbers support the strategy.
At a Glance
- What it is: Financial model for owner-occupied multi-unit purchase
- Why it matters: Determines if you'll live for free or subsidize tenants
- Key metric: Mortgage offset (rent from other units vs. your PITI)
- Inputs: Purchase price, rent comps, expenses, financing terms
- Output: Monthly out-of-pocket housing cost (or surplus)
How It Works
Step 1: Gross rent. Use rental-comps for each unit. Don't use the listing's "projected" rent unless it's backed by comps. For the unit you'll occupy, you can value it at market-rent for analysis even though you won't collect it yet.
Step 2: Effective rent. Apply vacancy-loss (8–10% in most markets) and credit-loss (1–2%). That gives you effective-rent from the rented units.
Step 3: Operating expenses. Property-tax, insurance, maintenance, capex reserve, property management (if applicable). Typically 35–50% of gross for small multi-family.
Step 4: PITI. Piti based on your loan terms. Use low-money-down rates (FHA, conventional owner-occupied) for house hacks.
Step 5: Offset calculation. Rent from other units minus their share of expenses. Compare to total PITI. If rent ≥ PITI, full offset. If rent > PITI + your unit's expense share, you have surplus.
Real-World Example
Alex in Dallas. Alex analyzed a triplex listed at $310,000. Comps: $1,050, $1,100, $1,150 per unit. He'd live in the $1,150 unit. Gross from other two: $2,150. At 8% vacancy: $1,978 effective-rent. Expenses (taxes, insurance, maintenance, capex): $1,020. Two units' share: $680. Net from rented units: $1,298. His piti at 5% down: $2,050. Offset: $1,298. He'd pay $752/month out of pocket—not full offset, but still a discount vs. renting a similar unit for $1,150. He passed; he wanted full offset.
Pros & Cons
- Reveals true housing cost (or surplus)
- Prevents overpaying for marginal house hacks
- Uses same discipline as deal-analysis-process
- Surfaces financing impact (FHA vs. conventional)
- Requires accurate comps and expense assumptions
- Optimistic inputs make bad deals look good
Watch Out
- Rent inflation: Don't assume you'll get top-of-market rent day one
- Expense underestimation: CapEx and maintenance are real; use 1% of value or higher
- Financing mismatch: Model the loan you'll actually get, not a hypothetical
Ask an Investor
The Takeaway
House hack deal analysis applies the same rigor as any deal-analysis—but the output is your personal housing cost, not just cash-on-cash-return. Run it on every multi-unit you consider. Full offset is the goal; partial offset can still beat renting.