Househack: do you calculate the lack of a mortgage into your ROI?

[Gabe Viteri]

Hi all, First steps out of the gate here, and I just wanted to get some input from the folks here that have been doing this for awhile.

I came across BP too late in the game and had already purchased a SFR. I now want to buy a triplex, house hack the other two units, and rent my SFR out. As an aside, I don't want to sell my SFR because I have a favorable HELOC that I plan to invest using the BRRRR strategy.

SFR

My existing mortgage is $2537 all-in. I can get $3k to rent this house. After I calculate my capex + vacancy + maintenance, I am -$70 a month. I will have to manage it on my own for a time, which I am okay with.

Triplex

The HouseHack Triplex after Capex + vacancy on the other two units + maintenance while I'm living there will be -$296 while I'm living there (1 year minimum for loan purposes), and +$1005 when I move out based on current rental rates.

Assuming all units are filled when I move into the Triplex, I am technically exchanging my $2537 mortgage for a $371 payment to own two properties. Here's my question, am I fudging the numbers if I use the balance of $2166 (2537 - 371) as a positive monthly number? I understand this is no longer an income, but it is more specifically a reduction of debt. 

How should I be framing this concept financially? It seems like the cost of inaction is very high.

[Ned Carey]

@Gabe Viteri it seems to me you just reduced you living expenses by $2166. That is a significant reduction. I think that is a good financial decision as long as you don't blow that money on something else. If you save that money every month that will grow pretty quickly. 

Assuming these properties are located well in time inflation of rents should turn them to positive cash flow.