Vintage Duplex House Hack Investment Thoughts/ Opinions

[Bryson Cox]

I have a property currently under contract but I wanted to get some advice from other investors out there who could weigh in on our situation. My parents are currently renting (paying $4500/ mo) and want to use the house hacking method to get into a property that could be an investment long term, but also doubles as a fun place they can work on fixing up. The approach here is to focus on something multifamily with for long term tennants or short term rentals so they could use as their own residence for a couple of years before moving out and using the rent to cover the morgtage. 

The demand in this area is crazy high! All of the properties that hit the MLS sell within 7 days!

Purchase Price: $1,000,000 (about $480/sqft)

- 2100 sqft of livable space

- Lot size 5000 sqft (zoned to build a 3rd unit)

- 3/2 downstairs unit totaling 1200 sqft (market rent would get between $2200-2400/mo)

- 1/1 upstairs unit totaling 900 sqft (rents for $1800/mo with current tennant)

- 10-15K would be invested in adding a fence for privacy and turning the front and side yard into nice walkable sitting areas with seating. The home is on a corner and the areas in the yard are currently filled with big thick bushes which act as privacy protection as there is nothing but a shorter wall around the front and sides. The hope is to increase amenities for my parents which will allow us to charge more rent for tennants long term as well. 

- There is a rare 6 car parking lot in the back that could be used to build a 3rd unit as it is zoned for it. 

- It currently wouldnt break even as a rental investment, and when they move out in a couple of years it probably still wouldn't cash flow much. Instead of paying about $54K/yr (4500/ mo) that would go to someone elses rent they want to put it into this property. With the current tennant, their overall living expense would lower to around $3400/mo so they will save about $13k ($1100/mo) a year right off the bat.

The other option for them at this time would be to buy some $1million dollar home that is nice and fancy and doesn't have areas to build value or collect rent. This is hoping to turn a retail, home purchase into something that is more investment minded. But I want it to make sense long term.

Any thoughts or opinions are appreciated greatly!

Comparables in the Same Area:

#1.  Duplex

1656sqf livable space

1943 sqft lot size

3 bedrooms1 F/ 1H Bath

• Upgraded inside and out, not crazy fancy but has been updated

Pending now for $725,000 ($437/sqft)

#2. Duplex

1252 sqft livable space

3814 sqft lot size

3 bed/ 2 bath total

Sold for $800,000 ($639/sqft)

01/03/2020

#3. Triplex
1996 sq ft

5bed/ 3 bath total

Sold for $925,000 ($462.5/sqft)

on 01/27/2020