Up/down duplex house hack with significant renovations. Upper unit 4BR, 2Ba rented out to great tenants. Lower unit 2BR, 1Ba still living in and renovating. Appraised in 2022 for $440,000.

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

After graduating in college and facing some student loan debt, my now-husband and I became passionate about learning personal finance, financial independence, and real estate investing as a tool to achieve it. The best option for us at the time was to invest in a duplex, house-hack it by living in one unit and renting out the other, and making upgrades to improve the value over time. This allowed us minimal cash up front with opportunity for big rewards down the line.

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

We searched for an investor-friendly realtor through BiggerPockets and spent a lot of time scouring the MLS, running numbers, scouting neighborhoods, and seeing properties. After several offers on other properties that were beat by better offers, we learned how to "win" this one. We had to be flexible and switch to 5% conv. from FHA due to seller preference & property condition. Negotiated new siding during inspection, split cost 50-50 w/ seller, and wrapped our half into purchase price.

How did you finance this deal?

As I mentioned above, we had to switch from FHA financing to conventional financing for this property, but since we were going to be occupying the property, it was still only 5% down. The seller didn't want to consider FHA offers, which is common for sellers of properties in the condition it was in as there would likely be a lot of big work orders and potential delays before closing. Plus, they had already received multiple offers so we knew we had to make our offer more appealing.

How did you add value to the deal?

Over the last 2+ years we've lived in the property, we've made updates that improve rental income as well as the overall maintenance required. We also chose upgrades that are durable and will continue look nice after tenant wear and tear.

What was the outcome?

While we are still living here, we decided to get a HELOC on the property in order to essentially pay ourselves back for the work that we've put into it. We put nearly $15k down, ~$6k closing costs, and estimated $60-70k of work. Since the appraisal for the HELOC came in at $440k, we are basically able to pay ourselves back for this deal before starting our next.

Lessons learned? Challenges?

The renovation part of this deal took us MUCH longer than expected. Always be conservative in your projections; Add lots of extra time to your projected timeline when you're doing most of the work yourself and also when you're living in the property while renovating. We also learned how to plan projects in a more efficient way.

Also have to say that this was the most ideal way to learn how to manage tenants! We only had one unit and it was on our property, so we learned in small doses.

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

Doing this deal as a first time investor is how I learned my passion for real estate and decided to make it my career. I highly recommend working with real estate professionals who are not only "investor friendly" but who are investors themselves! The real life experience makes such a difference.

We worked with Tim Swierczek at Celebrity Home Loans for this deal, and I regularly continue to refer and work with him on deals for my clients now. He and his team are great!