First Detroit House Hack

[Kenyetta Smith]

Investment Info:

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

Purchase price: $55,000
Cash invested: $10,000

This is a duplex that I house hacked. I lived in the one bedroom unit upstairs and rented the 2 bedroom unit downstairs. The unit rented for $825/mo while the mortgage payment was around $630/mo.

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

I had graduated from college less than a year before purchasing this property. I wanted to jump into real estate by house hacking.

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

I used a realtor. This particular deal was listed by the same brokerage that represented me as a buyer so I was able to submit an offer before it went live on the MLS. It was a short sale and subject to bank approval. My initial offer was rejected and the bank countered higher which I accepted.

How did you finance this deal?

As a first time home buyer I got an FHA loan with a low down payment.

How did you add value to the deal?

I renovated the lower unit before placing a tenant. I saved thousands by doing the work myself with the help of my dad. We refinished the hardwood floors, painted, refurbished the kitchen cabinets, etc.

What was the outcome?

The place turned out great and I placed a tenant that stayed for 2 years until I was ready to sell it and move on to bigger deals.

Lessons learned? Challenges?

Paying pros is expensive and may not even be worth it depending on the property value. If you have a less expensive property and you're just starting out it's a great idea to consider doing a lot of the work yourself. I learned a ton and that info is useful when dealing with pros on bigger jobs. I'm not as naive as I was before I learned about the renovation process.

I didn't like my realtor and I should have shopped around for one that better fit my needs.