When determining Cap Rate for a House hack...

[David Antunes]

Super newbie analysis question here, but...

When calculating the Cap Rate for a Multi Family property that I intend to house hack, is it recommended that I use the NOI based off of the rent income only from the units I would be renting? Or is it better to include the amount I would be contributing* for the unit I would be living in?

For example, if I bought and held a 4-plex property and lived in 1 of the units, would Cap Rate equal:

(Annual income from units 1,2, and 3) - (Annual expenses) / Purchase price

Or would Cap Rate equal:

(Annual income from units 1,2, 3, and 4) - (Annual expenses) / Purchase price ?

*I expect I will have to pay something out of pocket towards monthly P&I because I'm only looking in popular mid-size cities with high demand, where it's very difficult to find house-hacking opportunities where I would pay nothing for rent.