2015 Duplex House Hack

[Andrew Ramos]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $157,500
Cash invested: $6,000

My cash invested is just what I put down to close the deal initially. I bought this duplex to house hack to free up cash for my racing hobby.

What made you interested in investing in this type of deal?

I was interested in the long term rental play with this duplex in addition to house hacking to improve my balance sheet now.

How did you find this deal and how did you negotiate it?

I found this deal on the MLS. The market was much nicer to buyers in 2015, so I offered 20% below their asking price. The seller countered at $162,500. I accepted their counter offer with the condition that they bring $5,000 to closing. When they agreed to that, in addition to my 3.5% down FHA loan, I ended up needing to bring very little cash to close the deal!

How did you finance this deal?

FHA, 30 year, 3.5% down

How did you add value to the deal?

My duplex unit was in rough shape when I first got it. The previous tenant was a smoker. I added value with just paint and carpet at first. Later, I redid the driveway and landscaping myself. I also redid the bathroom with help from a contractor on some items plus I had the kitchen redone in a high value way. New laminate flooring, painted cabinets with stainless pulls, tile backsplash, and quartz countertop from a local stone company with a remnant for a good price.

What was the outcome?

Now I house hack with the rental income exceeding the monthly mortgage+escrow payment.- The rent has increased significantly since then. Once I buy another duplex to rent and a single family to move into, I intend to fully rent this duplex at ~$1,000/month cash flow.

Lessons learned? Challenges?

It's not as hard and scary as it sounds to vet a new tenant. Most landlords charge below market rent. I don't like doing tile work and I am bad at it. Overall, this is the best financial move I've ever made.