My First House Hack BRRRR, A Look Back

[Jason Macht]

I wanted to share some lessons learned from looking back at my first real estate house hacking deal.  This is the first deal I ever attempted and it turned out to be a great success.

Lesson #1: Real estate is a long term game

I still own the 1st place I bought back in 2010 and it has generated the best return to date as well as enabled me to invest in additional deal due to the appreciation. I did not see that when I first started out, but the seed that was planted has blossomed beautifully.

Initially I ignored real estate investing because it felt too slow and too expensive at the time. But have since come to learn that there is not get rich quick. Investing is a lifestyle designed to improve your lifestyle over time.

Lesson #2: House hacking is the best way to get started

At the time, I didn’t know it but I was house hacking. The first deal was a 3 bed / 1 bath house I bought for $135,000 and rented 2 bedrooms to guys I found on craigslist.

With that, I essentially lived for free. The only thing I regret is not doing more of this back then. It wasn’t until 2017 that I refocused my energy on real estate.

Lesson #3: The BRRRR Strategy is the path to real wealth

Combining house hacking and the BRRRR strategy is the most powerful investing tool I've found to date. By living in a 1-4 unit property, using a 3.5% down FHA loan, forcing appreciation through improvements and then pulling out your equity with a cash out refinance or HELOC, this is how you grow your portfolio and recycle your cash into additional investments. Then repeat the process.

Lesson #4: Analysis is more like “Guesstimation”

Don’t succumb to analysis paralysis. The numbers will never be perfect. You are simply approximately what you assess to be a high likelihood of success. Unexpected things will happen for better and for worse. That’s OK.

Deal Update (as of July 2021)

Purchase: $135,000

Appraised: $300,000

HELOC: $90,000

Cashflows: ~$500/ mo (after expenses & cap ex reserves)