November 2022 House Hack!

[Parker Nelson]

Investment Info:

Single-family residence other investment.

Purchase price: $492,000
Cash invested: $13,000

First house hack! FHA 30 year loan (sellers bought down rate and paid for closing costs), 5 bed 2.5 bath; renting rooms out @850 each paying for most of the mortgage (~3500). Appraised at 560,000 when I purchased it; waiting for rates to go down a little more to refinance and get out of mortgage insurance (~350).

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

Needed a place to live, was tired of paying rent. It had enough rooms to pay for the mortgage, and I'm used to living with a lot of people so this place was exactly what I was looking for.

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

I found it on zillow. I had already fallen out of contact on another deal and offered on 9 other properties so my team was extremely fast. We told them we could close in two weeks and gave them a strong letter from my lender confirming that we were going to close that fast. Once we were under contract, the inspection came back with a few minor items and we were able to get the seller to buy my rate down and pay for all closing costs. TLDR Get under contract, then negotiate!

How did you finance this deal?

In college I saved up money in an investment portfolio and asked for some money from my family.

How did you add value to the deal?

The house was listed as a 3 bed 1 bath house with 2600 square feet, when I went and looked at it; it was actually a 5 bed 2.5 bath with a finished basement. I felt like many house hackers/investors passed it up because there wasn't enough bedrooms for a house hack and it would have been too expensive to rent out the whole house with a low down payment loan.

What was the outcome?

After I bought the house, it was an 'everest' moment for me and I didn't really execute quickly on my plan to rent out all of the rooms. I finally got an LLC set up, leases in place, and now 3 tenants even though I'm almost 6 months in. All of the new homeowner responsibilities took their toll but I'm finally in a good place with consistent rents coming in at 2550 not including the utilities we split. So I'm paying around $1000 a month for 'rent' but I own a house!

Lessons learned? Challenges?

1. Get under contract before negotiating, you can always back out of the deal with your earnest money if you set it up right.
2. Make a rough plan with deadlines after you purchase the home so that the plan actually gets executed.

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

Yes, Evan Rice at Atlas Real Estate and Joe Selander (left Megastar financial) were amazing resources and do anything to get the deal done!