You found a triplex listed at $385,000. Two units are rented at $1,100 each, and the third needs about $8,000 in work before you can move in. Your agent mentioned [FHA financing](https://entp.hud.gov/idapp/html/hicostlook.cfm). Your parents think you're crazy for wanting to be a landlord at 27. You're trying to figure out if the numbers actually work.
I bought my first triplex in 2019 using FHA. I made mistakes, learned a lot, and eventually bought two more small multifamily properties. Here's what I wish someone had shown me before that first deal.
Why FHA Works for House Hacking (and Where It Doesn't)
FHA lets you buy a 2-4 unit property with 3.5% down, as long as you live in one unit. On a $385,000 triplex, that's $13,475 down versus $77,000 for a conventional 20% down payment. The difference in barrier to entry is massive.
But FHA comes with costs that conventional loans don't:
On a $371,525 loan (after 3.5% down), that upfront MIP adds $6,502 to your loan balance. Your monthly MIP payment starts around $173 and slowly decreases as you pay down principal.
This is where people get confused. They see the low down payment and ignore the ongoing cost. Over a 7-year hold (average for house hackers before they move to their next property), you'll pay roughly $13,500 in MIP. That's real money.
But here's my take: if you don't have $77,000 sitting around, the MIP is the cost of getting started. You can refinance into a conventional loan once you have 20% equity, which often happens faster than you'd expect with a value-add triplex.
The Rental Income Qualification Trick
FHA lets you count 75% of the rental income from the units you won't occupy toward qualifying for the loan. This is huge because it means you're not qualifying based solely on your W-2 income.
Here's how it works with our $385,000 triplex:
> Gross rent from two units: $1,100 × 2 = $2,200/month > FHA qualifying income: $2,200 × 0.75 = $1,650/month
That $1,650 gets added to your income when calculating your debt-to-income ratio. If you make $65,000/year ($5,417/month), your qualifying income becomes $7,067/month.
Most lenders want your total debt payments (including the new mortgage) under 43% of your qualifying income. With $7,067 in qualifying income, you could carry up to $3,039 in monthly debt payments.
This math is why people who couldn't qualify for a $350,000 single-family home can sometimes qualify for a $400,000 triplex. The rental income does the heavy lifting.
Running the Actual Numbers on a $385,000 Triplex
Let me show you what this looks like month by month. I'm using realistic numbers for a Midwest market in 2024.
Purchase details:
Loan details:
Income:
Your out-of-pocket housing cost:
> $3,175 (total payment) - $2,200 (rent collected) = $975/month
You're living in a 3-bedroom unit for $975/month, building equity, and getting landlord experience. In most markets, a comparable apartment would rent for $1,200-1,500.
What About Expenses Beyond the Mortgage?
This is where new investors get burned. That $975/month assumes everything goes perfectly. It won't.
You need to budget for:
| Expense | Monthly Amount | Annual |
|---|---|---|
| Vacancy (5%) | $110 | $1,320 |
| Repairs (8%) | $176 | $2,112 |
| CapEx (5%) | $110 | $1,320 |
| Property management | $0 (self-manage) | $0 |
| Lawn/snow | $75 | $900 |
| Water/sewer/trash | $180 | $2,160 |
| **Total reserves** | **$651** | **$7,812** |
With full expense loading, your real numbers look like this:
> $2,200 (rent) - $651 (expenses) = $1,549 net operating income > $3,175 (payment) - $1,549 (NOI) = $1,626/month out of pocket
That's more than double the simple calculation. This is the number I use when I'm analyzing a deal, because it accounts for reality.
But wait. Even at $1,626/month, you're still:
The "Live Free" Math Everyone Talks About
You've probably seen posts claiming you can live for free by house hacking. Let's see what that actually requires.
To break even on our triplex (with full expense loading):
> Required NOI = $3,175/month > Required gross rent (at 70% expense ratio) = $4,536/month > Per-unit rent needed (2 units) = $2,268/month
You'd need to collect $2,268 per unit to truly live for free with proper reserves. On a $385,000 triplex, that's not realistic in most markets.
Here's what actually gets people to "live free":
I lived "free" (actually negative $47/month cash flow to me) for 11 months in my second property, a fourplex. But I bought it off-market from a tired landlord, rents were 22% below market, and I put in sweat equity renovating the vacant unit myself.
What Can Actually Go Wrong
Deferred maintenance surprises. I bought my triplex knowing the roof had 5-7 years left. What I didn't know was that the main sewer line had root intrusion. Three months in, I had sewage backing up into the basement. Cost: $4,200 for sewer line replacement. My reserves covered it, but barely.
Get a sewer scope. Every time. It costs $150-300 and can save you thousands.
Tenant turnover timing. My Unit 2 tenant gave notice two weeks after closing. So instead of collecting $1,100/month from day one, I had a vacant unit during my first month as a landlord. I found a new tenant in 19 days, but that was 19 days of panic, showings after work, and no rental income.
Assume you'll have turnover in year one. Budget for it.
The FHA self-sufficiency test. FHA has a rule for 3-4 unit properties: the property must be "self-sufficient," meaning 75% of the total rental income (including your unit at market rent) must exceed the mortgage payment.
Our triplex math:
> Total potential rent: $1,100 × 3 = $3,300/month > 75% of total rent: $2,475/month > Mortgage payment (PITI + MIP): $3,175/month
This property fails the self-sufficiency test. The lender would need to use a 75% LTV instead of 96.5%, meaning you'd need about $96,000 down instead of $13,475.
This kills a lot of triplex deals. You need either lower purchase prices, higher rents, or lower interest rates to pass. Always run this calculation before falling in love with a property.
The Long-Term Wealth Building Angle
House hacking isn't about living free today. It's about what happens over five to seven years.
Let's project our triplex forward five years, assuming:
| Year | Monthly Rent (2 units) | Property Value | Loan Balance | Equity |
|---|---|---|---|---|
| 0 | $2,200 | $385,000 | $378,027 | $6,973 |
| 1 | $2,266 | $396,550 | $373,500 | $23,050 |
| 2 | $2,334 | $408,447 | $368,750 | $39,697 |
| 3 | $2,404 | $420,700 | $363,770 | $56,930 |
| 4 | $2,476 | $433,321 | $358,550 | $74,771 |
| 5 | $2,550 | $446,321 | $353,085 | $93,236 |
After five years, you have $93,236 in equity. You've been living at a discount to market rent the entire time. And you now have enough equity to:
When you move out and rent Unit 3 for $1,100:
> Year 5 gross rent: $3,400/month (3 units) > Estimated expenses (30%): $1,020/month > Mortgage payment: ~$3,100/month (after refi, no MIP) > Monthly cash flow: $280/month
Not life-changing money. But you now own a $446,000 asset with $93,000 in equity, generating positive cash flow, that you bought with $31,000 out of pocket.
Is a Triplex the Right Move?
Triplexes sit in an awkward middle ground. Duplexes are easier to find and finance. Fourplexes give you better per-door economics. Triplexes often have weird layouts (one unit is always the oddball) and can be harder to sell later because the buyer pool is smaller.
I'd buy a triplex if:
I'd skip it if:
Running Your Own Analysis
The example I walked through is one deal in one market. Your numbers will be different. Interest rates change. Local rent-to-price ratios vary wildly. Property taxes in New Jersey look nothing like property taxes in Indiana.
Plug your specific deal into the [house hack calculator](/tools/house-hack) to see your actual monthly cost, cash-on-cash return, and break-even rent assumptions. Run it with conservative expense estimates first, then see how the numbers change if everything goes right.
The goal isn't to find a deal that works if you're lucky. The goal is to find a deal that works even when things go sideways.