#3 House-Hack to Rent-by-Room College Rental Yield More Cashflow Than Quadplex

[Zachary McDonough]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $390,000
Cash invested: $30,000

A fantastic house-hack opportunity that is now acting as a college rental! This was my 3rd rental ever!
I bought this place, and it needed some polishing. It was a 4 bedroom house and I added a bedroom to add tremendous investment value, not market value.
Is the house worth more because of the new bedroom? Well, yes probably, but when I bought the house, there was very little evidence of comps that supported an increase in value. So why would I add a bedroom? Investment value! For college rentals, another bedroom means more cashflow!!

Deep dive summary:
Source? MLS (guys be vigilant. There's deals on the market)
Financing? 5% down conventional (MAN! I love house-hacks!!)
Negotiation? Under market! Quick and clean offer for the win!!
This deal is worth $40k more than I bought it for and has been a cashcow!!

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

Value-add opportunity to add a bedroom in a neighborhood that I already own a house!!

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

MLS, a quick and clean offer worked out for me! I performed a pre-inspection and wrote an offer with no inspection contingency! I don't always recommend but it was very successful for me!

How did you finance this deal?

5% down conventional loan!

How did you add value to the deal?

Paint, floors and adding a bedroom!!

What was the outcome?

$2200/month - Mortgage
$3400/month - Rent
$30k all in!
Almost 48% return on investment (before variable expenses!)

Lessons learned? Challenges?

Be vigilant! The week before I struck out on deals in my market but kept going!!

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

Myself and my team!! We at NextHome pride ourselves in making people wealthy!