What percentage of monthly expenses should be covered?

[Jack Sullivan]

Hi, I'm looking to purchase my first house hack in the next few months and am working on my system to analyze cash flow for properties. I'm looking to do a duplex traditional house hack, living in one unit and renting the other. When analyzing properties, I'm finding that the monthly cash flow is often negative, which obviously sounds bad but doesn't account for my living for free in the other unit. Is there any rule of thumb or guideline to figure out how much of the remaining monthly expenses I should be covering? Would it make sense to perform the analysis as if I was another tenant and paying market-value rent for the unit I live in? Or maybe analyze each unit separately somehow? Any advice or directions to look into would be appreciated.

[Tyler Gibson]

Quote from @Jack Sullivan:

Hi, I'm looking to purchase my first house hack in the next few months and am working on my system to analyze cash flow for properties. I'm looking to do a duplex traditional house hack, living in one unit and renting the other. When analyzing properties, I'm finding that the monthly cash flow is often negative, which obviously sounds bad but doesn't account for my living for free in the other unit. Is there any rule of thumb or guideline to figure out how much of the remaining monthly expenses I should be covering? Would it make sense to perform the analysis as if I was another tenant and paying market-value rent for the unit I live in? Or maybe analyze each unit separately somehow? Any advice or directions to look into would be appreciated.

 Very rarely are you ever going to find a house hack where you can live completely for free. It's not impossible but it is rare. I tell people that really want to house hack to focus on a deal where their cost of living is going to be less than renting because of the house hack. If you're paying $1,500 a month in rent and you can buy a house hack where your total out of pocket expenses are $900 a month that could be a great deal. You've reduced your cost of living you're also putting your money towards paying down the principal which is increasing your net worth. The trick is to save the difference between what you were paying in rent and what you're now paying in the mortgage to save up more capital for your next investment.