House Hack on a 2-Family in Southington, CT

[Michael Noto]

Investment Info:

Small multi-family (2-4 units) other investment in Southington.

Every Monday I will be highlighting a deal I was apart of either as an investor or agent highlighting a different investment strategy and how it was executed in the local market.

This past spring I was a buyer agent on a 2-family house hack deal in Southington, Connecticut.

Property details:
- 2- family side-by-side duplex
- Each unit identical 2-bed/1-bath layouts
- Natural gas heat
- Each unit has own driveway
- Solid B+ neighborhood
- Very desirable area to rent and own

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

My clients are a couple and one of them purchased a 3-family with a FHA loan the year prior and now were looking for another house hack to put in the others name. The neighborhood and condition were the major draws for this deal. Clients preferred a ready to rent property because of busy W-2 jobs and were really focused on areas where they could attract top flight tenants. This checked both boxes which is rare in this market.

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

This is one of those deals you read about where you have to act fast in order to get it. We were there to view the property within 5-6 hours and put our offer in. I advised my client to make a very aggressive offer right off the bat because this was going to be a competitive situation. From knowing the market like they did, they agreed and offered $5k above ask. We also did not request either unit vacant upon sale, clients were comfortable dealing w/ that issue after they closed.

How did you finance this deal?

Deal financed using a low money down conventional owner occupied loan that was offered by a local bank. This made a huge difference to the sellers who weren't interested in going down the FHA route.

How did you add value to the deal?

Rents were raised to market rent on the rented unit within 6 months of my client owning the property (it wasn't that far under to begin with) and as it turns out one of the tenants was planning to leave within a couple months of close anyway so they were easily able to satisfy their owner occupant requirement.

What was the outcome?

These clients now have a total of 5-units they have acquired through the house hacking strategy within a couple years. Both are in neighborhoods they are comfortable with and I have helped them with some tenant screening type questions when they were filling vacancies and they seem to have quality tenants in all units.

Lessons learned? Challenges?

This deal showed me once again the need to get creative with offers in order to land places in desirable areas in this market. Using the conventional loan vs FHA and my clients having confidence to not request a unit vacant upon close were huge determining factors in the sellers accepting their offer. Credit to my clients for understanding these intricacies because not all of them do.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Worked with Liberty Bank (local bank) who had this loan product was key for this deal.