2 Homes at 24 - What could possibly go wrong...

[Jake Andronico]

For more context, here's a quick background of my first house hack: https://www.biggerpockets.com/forums/922/topics/1133476-hous...

After purchasing, renovating, and eventually moving out of the 1st one, I was not sure if I'd be able to do it again....

It was a TON of work. Many things went wrong (more in depth below). Cash reserves were/are HUGELY instrumental. 

#1

Purchase Price: $356,900

Because of the luck of my timing, this house appraised for $480K in November of 2021, and I was able to pull out roughly $20K to do renovations, pay off my roughly $63K 2nd, and have a LOWER payment each month. 

Interest rate went from 4.25% to 3.25%......

But I hunkered down and did it..... I was able to save $45K in 15 months waiting tables and flipping items on eBay ($100 saved per day on average).  

Because I was living for free (and used any cash flow to deal with reserves). 

12-15 hour days. I was single, exhausted, and had extremely limited friend/family time.

Here are some items I flipped on eBay (focused on vintage/higher end electronics): 

I was able to put 10% down ($45K) on the 2nd house hack: 

#2

Purchase Price: $412,500

WHAT WENT WRONG AT PROPERTY #1 AND #2 IN LESS THAN 4 YEARS: 

(Keep in mind, both properties are from the 1970's)

Property #1: 

- Water heater leak (replaced) (approx. $1,900 replacement)

- Brand new replacement water heater then leaked less than 1 year later (was leaking for multiple days before I was aware, $2,500 to fix properly)

- Old shower handle fell off, exposing old piping that was "about to burst" per plumber ($750 replacement) 

- Kitchen sink leak ($250 repair) 

- Old breaker panel replacement (approx. $2,000) 

- Fence post fix ($350) 

- New Furnace ($5,500) 

- Bird infestation removal resealing attic ($850)

- New Vapor Barrier in crawl space ($975)

Property #2: 

- New Water Heater ($2,000) 

- Repaired main water line ($950)

- Hot tub removal ($600) 

- Tree removal ($1,235) 

- Bathroom fan replacement ($500) 

- Towel Bar replacement ($150) 

- New microwave ($450) 

- Pergola removal ($400) - (Due to damage from roofing materials crushing part of it during a strong wind) 

- New Roof ($13,695)

I have probably missed a few items as well..... 

Moral of the story: 

If you're doing SFR's, each house is a business, and ultimately, a product (IMO). 

When you rent an asset, you are renting a product. 

It can break, it requires upkeep, and it will require some repairs (eventually). 

Having cash reserves/savings has literally saved me multiple times. 

For anyone just getting started, currently house hacking, or even for seasoned investors, I'm constantly reminded to not discount having sufficient cash reserves. 

Makes it easier to sleep at night!!

[Julien Jeannot]

@Jake AndronicoWell done!

Take a look into a home warranty next time to edge against failing appliances (or hope they break.)

I've had a furnace, multiple bathroom fans, microwaves, garbage disposals and other pieces of appliance replaced for practically nothing. Customer experience isn't great with those companies, but great ROI.