Base Case Assumptions
Base case assumptions for rent vs. house hack 10-year comparison
| Parameter | Value |
|---|---|
| Renter’s monthly housing cost | $1,800/month (rising 3%/yr) |
| House hack purchase price | $350,000 duplex |
| Down payment (FHA, 3.5%) | $12,250 |
| Monthly PITI total | $2,800/month |
| Rental income (one unit) | $1,400/month (rising 3%/yr) |
| House hacker’s net cost | $1,400/month (rising ~2%/yr) |
| Property appreciation | 3.5%/year |
| Alternative investment return (renter) | 7%/year on down payment savings |
Year 1: Initial Comparison
Renter: $1,800/month × 12 = $21,600 in housing expense. Zero equity. House hacker: $1,400/month net = $16,800 in effective housing expense. Builds $3,200 in principal paydown. Exposure to $350,000 in real estate appreciating 3.5%/yr ($12,250 Year 1 appreciation). Net advantage of house hacking in Year 1: approximately $4,800 in cash savings + $15,450 in equity/appreciation gains.
Over 10 years, house hacker accumulates: $88,000 in equity (principal paydown), $143,000 in appreciation (3.5%/yr from $350K), $35,000 in housing cost savings vs. renting. Total wealth advantage: $220,000+. The renter who invested the down payment in stocks at 7%/yr would have only $24,000 more — a net wealth advantage for house hacking of $196,000.
The 10-Year Wealth Accumulation Table
10-year cumulative housing cost and wealth comparison: renting vs. house hacking
| Year | Renter: Cumulative Housing Cost | House Hacker Net Cost | Hacker’s Equity + Appreciation |
|---|---|---|---|
| 1 | $21,600 | $16,800 | $15,450 |
| 2 | $43,416 | $33,832 | $31,416 |
| 3 | $65,518 | $51,100 | $47,915 |
| 5 | $111,578 | $86,684 | $82,891 |
| 7 | $159,813 | $123,448 | $121,574 |
| 10 | $234,428 | $180,924 | $220,455 |
When Renting Might Win
Renting beats house hacking when: (1) you’ll move within 2–3 years (transaction costs eat into gains); (2) your local market has extremely high purchase prices relative to rent; (3) you have no appetite for landlord responsibilities; or (4) you can invest the down payment capital at significantly higher returns than real estate appreciation provides. In most U.S. markets for buyers who stay 5+ years, house hacking wins convincingly.
Compare House Hacking vs. Renting in Your Market
Enter local property prices and rents to see your 10-year wealth comparison.