House Hacking Weaverville, NC

[Will Morrison]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $406,800
Cash invested: $44,296

My wife and I recently closed on a property in Weaverville NC that will serve as our next house hack (HH)! If you don’t know, House Hacking was originally coined by Brandon Turner of Bigger Pockets. It is essentially sharing a property with tenants whether that is a room, basement, adu, etc in which their rent supplements the mortgage. Other benefits might include tax write offs, increasing your debt to income ratio, and being able to buy investment properties for as little as 3.5% down.

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

For this one, our strategy was to find a property that had two separate spaces and was located in an area that we could see ourselves living in. The property that we ended up purchasing has a basement separated from the upper level by a staircase. For us, separate spaces are key to a sustainable HH. I'm all about the HH where I see the tenants outside on walks rather than in the kitchen..

Depending on where you live, it can be fairly simple to find a property that fits the spacing requirement.

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

We found this deal on the MLS. Offered above asking to lock in the property and negotiated it to below asking upon the due diligence request.

How did you finance this deal?

When I run numbers on HHs I like to look at a couple different scenarios. For this specific property, it can be a STR, MTR, LTR, or HH. When running the numbers, I choose to create a spreadsheet for each rental scenario so that I can understand my property's potential while I'm living there and after I move out. In my opinion, STR income is typically the most risky, however it offers the most income potential. LTR is typically the most conservative and more of a guarantee of monthly income.

How did you add value to the deal?

Since this property has stairs leading to the basement, our plan is to remove them and add a bathroom upstairs in the space. Although this is an irreversible move and might change the resale in the future, I believe that it will only have a positive effect. Adding a bathroom upstairs will increase the functionality of the space and add value. In my opinion, as property values continue to rise, house hacking will become a more normal and desirable home trait

What was the outcome?

We are financing this through private financing, and are planning to put a sum towards downstairs improvements to increase rent potential. The great thing about house hacking is that it can be achieved through a variety of loans. FHA is one of the most tempting options as it is a primary residence loan in which you can put as little as 3.5% down. There is a catch though: the potential for permanent PMI payments. For that reason, I see clients opt for conventional loans.

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

Closing Thoughts
We are fortunate to piece a deal together with so much potential in an area we like! If you are planning to purchase a home as an investor, consider house hacking as it can lower one of your biggest monthly expenses. As an agent I’m happy to share my resources or help talk through deals for anyone interested in investing.