My "House Hacking" Story

[Greg Szymbor]

This is my house hacking story that will go into a little depth of how I got into real estate, live debt free, and show some rough numbers of my property. This is my first “blog/forum” and will help me achieve my goal of sharing more experiences and information through blogging. Hope you enjoy!

Roughly two years ago I purchased my first 4-unit using a FHA first-time home buyers loan for 3.5% down and a low interest rate. The purchase price was 140,000 and I was able to finance the closing costs to make my total out of pocket investment around $5,500 after inspections, fees, and down payment. I moved into a one bedroom apartment that required some TLC and updating, the other three units were in turn-key condition. I did the work on the one bedroom myself while living there and racked up a construction bill of $3,000.

Total Out of Pocket Expenses: $8,500

The PiTi (principle, interest, taxes, insurance) plus MIP is around $1150. The average cost of expenses for this property over the last two years has been $490 a month.

Total Monthly Expenses: $1640

The three remaining units rented out for an average of $2100 a month over the last two years. (Had two one week turnover so vacancy was not factored in). This gave me an average cash flow of $460 a month. Over two years this piled up in my bank account and is now at $9,900 (includes some random vendors not included in the monthly expenses)

I recently got the building appraised at $190,000! Subtract my mortgage which is at 140,000 (only have paid off the financed closing costs it looks like) for a total equity of $50,000!

So over the last two years I have earn my initial investment of $8,500 back, earned an extra $1,400, built up equity of $50,000, and lived rent free all off one property!

For anyone that doesn't currently own property and can qualify for the FHA loan, I strongly recommend jumping into real estate this way. I have zero regrets on my first property because it has allowed me to continue investing in real estate by creating a "live free" environment.

Thanks for reading and I hope this story helps someone!

[Swat Khan]

This is a great story. Thanks for sharing. It reminds me of when I didn't pull the trigger on 4-unit REO in a depressed SoCal market and I was using FHA. There were 5 of these properties that came on to the market (between $300-350K) and I overlooked the deals because I was pre-occupied on my other projects, my significant other wasn't too fond living with tenants, and I had to tack on an extra 30 mins to my commute.

What was so interesting about the deal was that I only had to put $20K down and could've lived for free and have extra cash in my pocket every month from cash flow. 

I regret it now, because I drove the neighborhood and saw the properties were cleaned up. It got me curious, so I pulled out my Redfin app and saw one of the properties recently sold for $800K! That's more than double the equity and also rents have risen substantially since then. 

Good job on taking action! Good luck with your next deal!