Househacking: Do you exclude your unit in deal calculations?

[Renée Volny Darko]

Hi! When looking at a deal for a househack in 2-4 unit multiplex, do you exclude your unit's rent in the calculation? For example, a quadplex that could rent for $2000/unit would be $8000. But in a househack situation, would you only consider it to be $6000 since you are occupying a unit? Also, what if you are only househacking for a 2yr period to renovate the place, would you still exclude your unit in the deal calc or include it knowing that you will be collecting rent on that unit in 2yrs? Thanks in advance!

[Matthew Dennehy]

It’s best to run two separate calculations. First, calculate your income and expenses for the first few years while you’re living there (only include actual rent from units you don’t occupy). Next calculate you income and expenses when you move out (all projected income). If the property makes sense in both these scenarios, you can feel safe proceeding.

When it comes to financing, lenders often let you include 75% of the gross income of the property in your debt to income ratio when qualifying. That doesn’t include projected rent for the unit you will occupy.