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Updated over 2 years ago,
What is your NWROI of your Austin house hacks?
In The House Hacking Strategy Craig Curelop talks about determining a good house hack deal by using a metric called Net Worth Return On Investment (NWROI). This is calculated using the following equation:
NWROI = (cash flow and rent savings + loan paydown + appreciation) / initial investment
(You can read an article explaining this here: https://www.biggerpockets.com/...)
I'd love to hear what house hackers expected their NWROI to be when they initially purchased a property and what it ended up being. I'm curious to hear both because the massive appreciation has dramatically increased returns.
I bought a duplex in November 2020. I'm living in a 3/2 and renting a 2/1 as a medium-term rental.
Analysis when I purchased the property:
Cash flow and rent savings: -$15,377 cashflow + $18,000 rent savings
Loan paydown: $10,200
Appreciation: $61,674 *This is the total cost to renovate my property. I assumed that it would appreciate according to how much money I put in, I did not factor in any market appreciation.
Initial Investment: $69,000 down payment + $4,654 in furniture for MTR
(-$15,377 + $18,000 + $10,200 + $61,674) / ($69,000 + $4,654) = 58.25% NWROI
Actual returns:
Cash flow and rent savings: -$15,377 cashflow + $18,000 rent savings
Loan paydown: $10,200
Appreciation: $275,000 *This is the current equity I have in the property if I sold today.
Initial Investment: $69,000 down payment + $4,654 in furniture for MTR
(-$15,377 + $18,000 + $10,200 + $275,000) / ($69,000 + $4,654) = 212.69% NWROI
In today's market I think it's important to look at NWROI because the cashflow is harder to come by with the rising prices and interest rates. Does anyone else use NWROI to calculate a good house hack deal?