Our First house hack

[Jonathan Boyd]

Investment Info:

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

Purchase price: $135,000
Cash invested: $35,000

We bought a duplex as a house-hack off the MLS. It needed a lot of work- it barely qualified for FHA (in some ways it didn't as the seller had to address several issues before closing.) We hired out the big projects (new drywall, refinishing wood floors, installing new window, etc) and did all the cosmetic work ourselves while we lived there. Rent from the one side covered our mortgage while we lived there, and upon moving out, rent from the other side is pure cash flow. Along the way, we refinanced to cash out some equity and eliminate PMI.

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

We needed to get out of our apartment, and I insisted on a duplex

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

Used a realtor and found it on the MLS. It wasn't managed well and was originally listed for $160k. After negotiation, we got the price to $145k, but FHA appraisal came to $135k.

How did you finance this deal?

FHA loan

How did you add value to the deal?

Tore out the paneling and installed drywall with insulation; all cosmetics updated; installed window in a room that had none to make it officially a 6 bedroom dwelling (duplex with 2 units of 3b/1ba;) installed new-ish appliances in kitchen; installed permanent shelves in the oversized laundry rooms for much-needed storage; and added sheds to backyards.

What was the outcome?

Rents were raised and stable tenants were placed. Value of house was appraised at what we had in it ($135k purchase + 30k in repairs.)

Lessons learned? Challenges?

A house hack is truly the golden ticket everyone touts it to be! Also, don't write off properties too quickly: while looking at several duplexes in the area, we wrote this one off because of the condition and the area looked bad. Truth is, the area was ok, this house was just the worst on the block.
Some of the challenges were trying to repair a place while living there and working full time- just understand what you can and can't do while living in a property