Into a House Hack - No Money Down!

[Branden Pfaff]

Into a house hack for no money down?

It was my wife and I’s goal, and now we achieved it (courtesy of the Midwest and bigger pockets)!!!

Residents in South Dakota that are recent graduates get a 5% grant on homes up to $250k - covering all of the 3.5% DP. To the make the most of this grant, we wanted to use it to get into a duplex to house hack.

We are closing at the end of the month and here are the numbers (keep in mind our end goal was to start slowly into real estate and gain experience, we are not planning to scale quickly at this point).

Property Type: Duplex

Purchase price: $217k

All Closing costs paid by seller: $7k

5 year Home warranty to cover all appliances, AC, Furnaces (paid by seller): $4k

Our 5% grant: $10.5K

So we are into the property with $600 out of pocket for an inspection.

Comps put the duplex between 225-235k.

Exit strategy: Live with minimal expenses in the duplex for 3-5 years then Refi to conventional. If rates stay close to where they are, we should be close to the 50% rule after Refi. 

Like I said - we aren’t going to stand a great profit from this deal, but we will be paying less than half the rent of a comparable appt in our city, while gaining equity (and experience!!).

Biggest lesson I’ve learned from this deal thus far is having a good team. In this instance I had my realtor that was working hard to find off market deals, as well as a mortgage lender that knew the best financing options for me.

We are excited to get going.

Thanks to BP for encouraging us to take that first step.