First House-Hack, 23 y/o

[Max Wittling]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $500,000
Cash invested: $100,000

House Hack. Fully finished basement (in-law suite type deal) with full facilities and over ~1,300 sq.ft. of space. The skeleton (plumbing, wiring, etc) was there at purchase, and spent about $10k finishing the space, adding a stove, refrigerator, etc. Uniquely, the in-law suit has its own private backyard available as well.

Locked in the 400k loan at a 6.875% interest rate. Given the high interest rate + the fact that we are currently renting out the in-law to friends/family for a preferential rate ($1100, no utility costs), we are definitely not making anything close to cashflow on this property right now.

However, I think this deal will age like fine wine. Once/if interest rates drop and a refinance occurs, and rents inevitably rise, this property should be one that I my wife and I can move out of in half a decade or so and reap cashflow from.

The first rental is never the most profitable. But we have to start somewhere right?

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

Frankly, I work from home and I needed more space. My wife and I sold our little condo in the city and relocated to this much larger ranch style house. The rental potential for the basement posed the perfect opportunity to begin my journey as a landlord with a house hack of my own.

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

Was initially listed at ~$580k. It sat on the market for some time given the state the market was in at the time (interest rates rising rapidly). This gave us negotiating power. Closed at ~$500k, they paid full closing.

How did you finance this deal?

~$50k from sale of condo
~$30k from personal savings
~$20k via private loan (as of writing, about $8k of loan has been paid off within 4 months, about ~12k remaining)

How did you add value to the deal?

Finished basement (sheetrock ceiling, LVP flooring, etc.). Painted plenty of things. Tore down many overgrown bushes.

Lessons learned? Challenges?

I learned first-hand how time-consuming the little tasks associated with fixing up a property are.