Chicago · 2 to 4 unit buildings
Sometimes it covers all of it. More often it covers a big piece, and you pay the rest. That sounds like bad news until you see what the rest of that payment is actually doing for you. Walk through it with us, because the honest math is better than most people expect.
Say you buy a two-flat, live in one unit, and rent out the other. Most of America calls this building a duplex, and people call the move a house hack. Your tenant's rent goes toward the mortgage, the taxes, and the insurance every month. In some buildings that rent pays the whole bill. In plenty of good ones it pays most of it, and you cover the gap.
The first place we ever bought worked exactly this way. It was a house hack, and a renter covered about 60% of the mortgage. The rest still got paid by check every month, and that check was building equity the whole time. Equity is just the part of the building you truly own.
Here is the part nobody explains. If the rent covers 60% and you pay the other 40%, you are not losing that 40%. You are paying it instead of rent. Which brings us to the real question.
Most people compare a house hack to living for free. Free is a fun goal, and some buyers get there. But it is the wrong measuring stick for your first building.
The right measuring stick is what you pay in rent right now. Rent buys you a place to live and nothing else. When your lease ends, you own nothing you didn't own before.
Now run the house hack against that. Say your share of the building's monthly bill lands near your current rent. You live for about the same money. The difference is that part of every payment now builds your equity instead of your landlord's. Your money stops disappearing and starts stacking up.
Even when your share runs a little higher than your rent, you may still come out ahead. Here is why.
Every mortgage payment splits in two. One part is interest. The other part pays down the loan itself, so you owe a little less each month than the month before.
When a tenant's rent funds that paydown, it works like a 401K employer match. Money you did not earn at your job lands in your balance every month, just for owning the building and living in it. Nobody offers renters a match like that.
Now the plain truth in the middle of the good news. Some first-year house hacks still cost money out of pocket every month, and a building that looks cheap can be the one that never gets close. The gap depends on the price, the number of units, the bedroom counts, your down payment, and the block the building sits on. Two similar buildings a couple miles apart can give you opposite answers.
That is why a citywide average will never answer this question for your building. The spread between neighborhoods is the story, and finding the building where the math works is the actual work. The good news is that the work is learnable, and buildings where it works are out there right now.
We built a deal analyzer so you can check this yourself. Put in a Chicago address and it shows you what a 2-flat, 3-flat, or 4-flat would rent for, what it costs to run, and what is left over each month. Run a building you saw on Zillow. Run five. The goal is for you to be able to spot a good deal on your own.
And when you want a human to talk it through, reach out. You don't need to know exactly what you want yet, most people who reach out don't. Bring a building, bring a question, or bring nothing at all. We are happy to start wherever you are.