Do you charge yourself rent when you underwrite the house hack?

This is the argument I keep having with two people I trust and they've never once agreed.

Setup. Duplex, $460k, payment $3,300 all in. The other side rents for $1,700. I live in the side that would also rent for $1,700. So I pay $1,600 a month to live there.

The first way to look at it: the property collects $3,400 against a $3,300 payment, roughly break-even, and my rent-free housing is the return. Underwriting it that way tells me whether the building works as a rental once I leave, which is the whole point if I'm going to move out and repeat. It also stops me from buying a bad building just because living in it feels cheap. The argument against is that it's fiction. Nobody is paying $1,700 for my unit while I'm in it. I can't spend it, I can't put it in reserves, and treating it as income makes a deal look funded when the actual bank account isn't.

The second way: count what shows up, $1,700 against $3,300, and compare $1,600 to what I'd otherwise pay in rent. That's real cash and it's the number that determines whether I can survive a vacancy. The argument against is that it flatters properties in expensive areas, where your own unit is worth a lot and the building doesn't actually work as an investment at all. You find that out on the way out, which is the expensive time to find it out.

Third position, which one of them holds: run both, and refuse the deal if either version fails. Slower, kills most deals, might be why he owns two buildings and I own none.

Curious where the room lands, especially people who've already moved out of one.