Marcus’s Profile and Starting Position
Marcus’s financial profile before house hacking
| Factor | Details |
|---|---|
| Age | 30 |
| Income | $72,000/year ($6,000/month gross) |
| Current rent | $1,450/month (paying market rate) |
| Credit score | 710 |
| Savings | $35,000 (down payment + emergency fund) |
| Student loans | $28,000 at $280/month |
| Target market | Columbus, OH (high rent-to-price ratio) |
| Target property | Triplex (3 units), 2BR each |
The Property: Columbus Triplex
Marcus finds a $320,000 triplex in Clintonville (near Ohio State). Each unit: 2BR/1BA. Current rents: $1,050/unit. FHA loan: 3.5% down = $11,200. Closing costs: $8,500. Emergency reserve: $8,000. Total cash needed: $27,700. Marcus has $35,000 — comfortable margin.
Year 1 Cash Flow Analysis
Marcus’s Year 1 monthly cash flow as a triplex house hacker
| Item | Monthly |
|---|---|
| FHA mortgage P+I (30yr, 7%) | $2,049 |
| FHA MIP (0.55%/yr) | $142 |
| Property taxes ($4,800/yr) | $400 |
| Insurance ($2,400/yr) | $200 |
| Maintenance reserve (1%) | $267 |
| Total monthly costs | $3,058 |
| Rental income: 2 units × $1,050 | $2,100 |
| Vacancy allowance (5%) | −$105 |
| Net rental income | $1,995 |
| Marcus’s effective monthly cost | $1,063 |
| Previous rent payment | $1,450 |
| Marcus’s monthly savings | $387 |
After 5 years: equity from principal paydown = $15,400. Property appreciation at 3.5%/yr = $60,000. Total housing cost savings vs. renting = $23,000+. Net worth increase attributable to house hacking: $98,000+. In addition, Marcus has learned property management and can pursue additional investment properties.
Year 3: Refinance Opportunity
By Year 3, if rates have dropped to 6.5%, Marcus can refinance to remove FHA MIP (once LTV reaches 80%), reducing monthly cost by $142. Additionally, rents have risen to $1,130/unit, increasing rental income by $160/month. By Year 3, Marcus’s effective housing cost has dropped to approximately $780/month — nearly half his original $1,450 rent payment.
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