First Home Purchase - House hack then split to multi unit

[Galen Heckathorn]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $422,000
Cash invested: $125,000

Bought this house with a partner as a primary residence in 2013. In 2016 I bought that partner out. Then my wife and I expanded the downstairs bedroom into the 3rd car garage space. This bedroom already had a full bathroom attached to it. We added an exterior entrance, a kitchenet (24" range, 24" Sink, and undercabinet fridge), and sealed it off from the rest of the house. The property now consists of the main house a 2,000 sqft 3bed 2 bath with 2 car garage, a studio apartment which is about 400 sqft. We unfortunately pay the utilities at this property as the split was done retroactively with now way to split the meters. We do of course factor that into the rents charged.

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

In 2013 was able to make my first purchase, and wanted to live in a home I owned. I knew I had to grab anything that I could before prices went up any more. This house was relatively new and in a great neighborhood with a lot of potential.

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

MLS, with our realtor, had to pay over asking.

How did you finance this deal?

traditional 20% down owner oc. 30 year fixed.

How did you add value to the deal?

replaced the carpet with hardwood, landscaped the front and back yards. Added about 220 sqft of living space to a bedroom and an exterior entrance. Then turned that bedroom into a studio apartment.

What was the outcome?

Awesome rental property that I will probably hold onto forever.

Lessons learned? Challenges?

Some partners can be hard to deal with but necessary at times. In the end it was all worth it. I also learned a lot about how to put together a set of plans to pull a permit with the city to add livable square footage to a house.

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

Michael Lunning is the realtor I used and continue to use, he is excellent.