Calculator

House-Hack vs. Rent + S&P 500.

House hacking = buying a 2–4 unit property, living in one unit, and renting the others to cover most or all of your mortgage.

Same engine the newsletter runs on every Bay Area listing. Drag a slider. Net worth, cash flow, ROI, and S&P breakeven update on the spot.

Want a worked example? Read the writeup of the Maryland townhouse I almost bought, then download the JSON and Import it below to see the same numbers.

Start withPick a real Bay Area listing or start from defaults. Then move whatever sliders matter to you.

After 10 years, the winner isRent + S&P 500

margin $202,250 (14.7% edge)

S&P could fall to 7.7% and still win

Is the juice worth the squeeze?Hybrid (2yr hack / 8yr rental) · thresholds 9.0% / 23.0% / 46.0%

Edge over House-Hack14.7%$202,250 total

Wealth multiplier9.2× · 10.5×10yr terminal ÷ starting capital

VerdictLeaning9.0–23.0% edge — real advantage, not overwhelming

Shared assumptionsInputs used by both scenarios

Personal Finance

Starting Capitalⓘ

Monthly Take-Homeⓘ

Groceries + Gas / Wkⓘ

Mortgage Terms (Property 1)

Down Payment %ⓘ

Mortgage Rateⓘ

Property Taxⓘ

Property Tax Growth / Yrⓘ

Home Insurance %ⓘ

PMI Rate (if <20% down)ⓘ

Buy Closing Costsⓘ

Property Costs

Property Utilities / Moⓘ

HOA / Mo (Property 1)ⓘ

Maint. & Vacancyⓘ

Emergency Coverage (Months)ⓘ

Cost to Sellⓘ

Market & Timing

General Inflationⓘ

Investment Returnⓘ

House-Hack Yearsⓘ

Projection Yearsⓘ

After You Move Out

Rent After Move-Outⓘ

Rent Growthⓘ

Personal Utilities / Moⓘ

Renter's Insurance / Moⓘ

Tenant pays utilities after move-out

A · House-HackThe property you'd buy

Home Priceⓘ

Number of Unitsⓘ

Rental Income / Mo (hack phase)ⓘ

Full Rent / Mo (post move-out)ⓘ

Upfront Repairsⓘ

Appreciationⓘ

Rent Growthⓘ

Marginal Tax Rate (opt-in)ⓘ

0 = tax model OFF (conservative). Set to your federal bracket (10/12/22/24/32/35/37) to estimate rental deductions — see disclaimers below for what this does and doesn't model.

Land Value % of Priceⓘ

B · Rent + S&P 500Rent forever, invest the difference

Monthly Rentⓘ

Rent Inflation / Yrⓘ

Renter's Insurance / Moⓘ

Utilities / Moⓘ

All $150,000 invested in S&P on day 1
No property tax, no maintenance, no selling costs
Rent inflates at 3%/yr (vs fixed mortgage)

Total wealth over time

House-HackS&P

No crossover — Rent + S&P 500 leads the entire 10-year horizon

House-hack breakdown

Net equityPortfolio

Year 10: $658k equity + $701k portfolio = $1.4M total

MetricA · $1,100,000B · Rent + S&P 500

Upfront Capital Allocationⓘ

Cash to Closeⓘ

$113,000

Buy Closing Costsⓘ

$33,000

Emergency Fund (set aside)ⓘ

$18,951

Leftover Capital → Invested Day 1ⓘ

$18,049

$150,000

Monthly Picture (Year 1)ⓘ

Mortgage PITIⓘ

$8,497

—

HOA Feesⓘ

Rent Paidⓘ

—

$3,000

Effective Rental Incomeⓘ

$2,816

—

Housing % of Take-Homeⓘ

74.0%

36.1%

Net Housing Costⓘ

$6,660

$3,275

Total Monthly Expensesⓘ

$7,093

$3,708

Monthly Surplus → Investⓘ

$1,907

$5,292

10-Year Outcomeⓘ

Home Value (Property 1)ⓘ

$1,551,659

—

Remaining Mortgage (Property 1)ⓘ

$894,085

—

Principal Paid (equity earned)ⓘ

$150,915

—

Appreciation Gainⓘ

$451,659

—

Hold Equity (Property 1)ⓘ

$657,574

Cost to Sell (6%)ⓘ

-$93,100

Liquidation Equity (Property 1)ⓘ

$564,474

Total Rent Collectedⓘ

$706,177

—

Total Rent Paidⓘ

-$412,700

Investment Portfolioⓘ

$700,746

$1,579,521

Hold Net Worthⓘ

$1,377,271

$1,579,521

Liquidation Net Worthⓘ

$1,284,171

$1,579,521

ROIⓘ

Total Gainⓘ

$1,227,271

$1,429,521

Total ROI %ⓘ

818.2%

953.0%

Money-weighted IRR (10yr)ⓘ

13.3%

10.0%

Wealth Multipleⓘ

9.18x

10.53x

Winner$1,377,271★ $1,579,521

Why this result

Leverage vs. liquidity. The house-hacker controls a $1,100,000 asset with $113,000 down. The renter invests the full $150,000 at 10% with zero leverage. At 3.5% appreciation, that's roughly 20x leverage on the buy side.

The renter's hidden cost: inflation. Rent inflates at 3%/yr. The mortgage P&I is fixed forever. Over 10 years, the renter's housing cost rises from $3,000 to $4,032/mo, while the homeowner's P&I never changes. That widening gap compounds.

Hold vs. liquidation. We compare hold equity, not liquidation. Most house-hackers don't sell at year 10. If you did sell everything, 6% selling costs would reduce property equity by $93,100, bringing net worth to $1,284,171.

Why the IRR row disagrees with the verdict. Scroll into the breakdown table and you'll see Rent + S&P 500 wins on dollars but shows a lower Money-weighted IRR (10.0%) than the losing path (13.3%). That's not a bug. It's two different questions. The wealth multiplier above answers who ends up with more money. The IRR answers whose dollars grew faster on a per-dollar basis. They can disagree when the two paths deploy different total amounts of capital: positive rental cashflow on the house-hack side gets counted as a fresh contribution in the IRR formula, which dilutes the per-dollar rate even when terminal wealth is higher. Both numbers are correct; trust the wealth multiplier for "am I richer?" and the IRR for "is my capital working efficiently?"

Stress test. Set rental income to $0, appreciation to 2%, investment return to 10%. If the S&P still wins, you're betting on tenants. If the house-hack still wins, the leverage is doing real work.

What flips the answer?

The house-hack would win if rental income exceeds roughly $4,258/mo, or if appreciation exceeds 5.3%. At current assumptions, the market's 10% compounding on $150,000 day-1 capital beats leveraged real estate.

Model scope

What this calculator does — and what it doesn't.

Directional, not a tax projection. The list below is everything it doesn't model. Read it before you act on any number here.

Modeled

30-year fixed mortgage amortization with monthly compounding.
PMI added when down payment is under 20%, terminated at 78% of the original purchase price (Homeowners Protection Act, 1998).
Property tax growth at the Property Tax Growth slider (default 2%, California Prop 13). Insurance, utilities, HOA, groceries inflate at the General Inflation slider.
Wage growth tracks General Inflation (not a hardcoded 3%).
Rent grows continuously across the hack → rental phase transition; your personal rent after move-out grows at its own rate.
Emergency fund is set aside on day one and returned to terminal wealth (held in cash, no growth applied).
If buying your next home isn't affordable from the projected portfolio, the model falls back to renting and surfaces a warning.
Rental-portion depreciation (27.5-year straight-line, land excluded via the Land Value % slider) and rental-portion mortgage interest are deducted at your Marginal Tax Rate — only when you opt in by setting that slider above 0%.
S&P 500 path uses the same starting capital, no leverage, mid-year-contribution annual compounding at the Investment Return rate.

Not modeled (every one of these can move the answer)

Tax owed on positive rental income. The tax model credits gross deductions at your marginal rate but never debits the tax due on Schedule E net income. For a 22–24% bracket W-2 owner of a leveraged property, the after-tax benefit actually captured is typically 40–70% of the “Tax Savings” figure shown — the rest gets clawed back by tax on positive rental income, the §469 phaseout, and depreciation recapture at sale.
Operating-expense deductions (rental-share property tax, insurance, repairs, professional management) on Schedule E. Conservative bias — this slightly understates the buyer's legitimate deductions and partially offsets item 1 above.
Passive activity loss limits (IRC §469). The $25k special allowance phases out between $100k–$150k MAGI; above $150k it's fully suspended until the property is sold or you qualify as a Real Estate Professional. Above $150k household income, most of the “Tax Savings” line is unrealizable until exit.
§1250 depreciation recapture at sale. When you sell, accumulated depreciation is taxed at up to 25% on the recapture portion specifically (regardless of the capital-gains rate). On a 10-year hold of a $900k multifamily, that's typically $20k–$50k of one-time tax owed at exit that the “Liquidation Net Worth” row above does not subtract. Capital gains on appreciation above basis are a separate event — see the next two bullets.
Owner-occupied capital-gains exclusion (IRC §121, $250k single / $500k MFJ). For a mixed-use property, only the residence-portion gain is excludable; the rental-portion gain is taxed at federal LTCG (15% / 20%) plus state, partially offsetting §121's benefit. Neither half is modeled.
Long-term capital gains tax on the S&P 500 path. The terminal portfolio value above is pre-tax. Federal LTCG (15% / 20% above ~$500k) plus 3.8% NIIT plus state tax applies only on realization, on gain net of basis (starting capital + cumulative contributions). On a $400k gain, full liquidation owes ~$60k–$95k federal; a 4%-rule withdrawal owes a small fraction per year; step-up basis at death owes zero.
Mortgage interest deduction (Schedule A) for the owner-occupied portion of the property and for any next home you buy after move-out.
State income tax.
Professional property management after move-out (typically 8–10% of gross rents).
True monthly DCA compounding. The portfolio uses a mid-year-deposit annual approximation, which understates true monthly compounding by roughly 3–4% over 10 years. Both scenarios use the same convention so the comparison is symmetric, but the absolute totals are slightly conservative.
Upfront Repairs depreciation. The Upfront Repairs input is treated as a one-time cash drag at closing, not added to the depreciable basis. Per Pub 527, capital improvements should be capitalized and depreciated (often as separate 5/15/27.5-yr assets); the calculator skips this for simplicity, which slightly understates the buyer's long-run depreciation deduction.
Refinancing, points, ARM resets, balloon terms, prepayment penalties.
Insurance claim deductibles, vacancy beyond the maint & vacancy %, evictions, special assessments.

Honest about the bias: during the hold, the unmodeled items slightly favor the S&P side (positive rental income gets taxed but isn't here). At exit, they slightly favor the property side: §121's benefit and missing S&P LTCG together outweigh the property's own unmodeled exit drags (§1250 recapture, rental-portion LTCG). We don't claim the unmodeled items wash out.

Default-value choices to know

Marginal Tax Rate defaults to 0%. This produces the conservative answer (no tax effect). Set it to your actual federal bracket (10/12/22/24/32/35/37) to enable the depreciation+interest model.
Land Value % defaults to 35% (Bay Area infill baseline; the rest of the page's defaults assume that scenario). Inland CA / Solano runs 25–30%; coastal SF 40–50%+; Texas suburbs 15–20%. Check your county assessor's split.
Property Tax Growth defaults to 2%/yr (California Prop 13 cap). Outside CA, set it closer to 3–5%.
Investment Return defaults to 10%/yr (S&P 500 long-run nominal). The actual realized return for any specific decade has varied widely.
5+ unit properties are not eligible for FHA or conventional residential financing. Use commercial inputs (25–30% down, 7–9% rate, no PMI). The calculator does not auto-detect or warn on this; you set the inputs.

Numbers here are estimates from public formulas, not advice. For your actual purchase decision, run your specific situation past a CPA and a mortgage broker.