Using 401k Loan to Purchase House Hack |Colorado Springs

[Ben Einspahr]

Hello BP,

Wanted to share the success story of Brad Dubis most recent rent by the room House Hack (HH#2) purchase in Colorado Springs.

Investment Info

5 bdrm/3 bth SFH in Colorado Springs, CO. Purchased September 2022

Purchase Price

$450,000

Total Cash Invested

$27,000

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

I was approved to work full time remotely with my Chicago company in June 2022, therefore allowing me to take advantage of a more affordable market in Southern CO, and create higher margins on house hacking. I had a budget, and 5 bdrm/3 bth was the "secret sauce" to increase my margins. I hope to continue this path and possibly increase the number of rooms for my next property.

How did you find the deal and did you do any negotiating?

We found it working with our Envision Advisors Agent Leah Keeling. Property was right off the MLS. Had to pay $10k over listing but Leah was able to negotiate $6k in seller concessions which helped decrease the downpayment amount.

How did you finance the deal?

I used my existing savings, and took out another $15,000 401k loan (currently paying this one back)

What was the outcome?

Since I purchased the property in late Aug 22 the value has increased. The property was basically turnkey minus some small DIY projects. More importantly I'm renting out 4 bedrooms and one garage spot while I live in the Master bdrm/ensuite. The rental cashflow is covering my entire mortgage and my utilities. I'm living for FREE. When I move out I'll profit about $900/month

Lessons learned? Challenges?

I've found something to my advantage that's enabled me to keep investing year over year. As I continue to keep building my 401k it's become my own bank. Some people probably wouldn't even think about doing this, but with great discipline and being focused on the task at hand it's an advantage for me. The interest rate is much lower than an equity loan, and I'm paying myself back. Eventually I hope to get to a point where the extra rental cashflow will suffice for savings and I won't have to take out anymore 401k loans.

Keep on crushing it Brad!