House Hack #2

[Ike Hobbs]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $136,000
Cash invested: $10,200

Small house with detached ADU in backyard. Buying as a house hack so was able to get a conventional loan and use this as my primary residence.

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

After finishing my last BRRR, I had my lease coming up for renewal in the main city I have to live in for my W2 Income. Realized it would probably be cheaper on a monthly basis to have a mortgage there rather than pay rent for another year.

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

Bought off the MLS. Negotiated a small price decrease due to it being on the market for 60+days and also had seller pay 3% closing costs.

How did you finance this deal?

Conventional financing. Was going for a 5% down loan but last minute had to adjust it to a 7.5% down but still a pretty minimal cash layout.

How did you add value to the deal?

This is one of the few value-add-less deals I'll do. This was more about me being able to use residential eligibility for a long term hold rather than pay rent each month.
In the future, I think both the large house and the ADU have great potential for AirBNB or Medium Term strategies. Decent location for this and the layout would be perfect. If I don't go that route though, moving out in a year and renting out at market rates will still be a decent return.

What was the outcome?

So far so good.

Lessons learned? Challenges?

Had some challenges with financing last minute. Partly due to the lender failing on some stuff, firing their processor and having to redo a lot of things last minute. This increased my down-payment amount and also axed some of the stuff I was hoping to save on but in the end it still worked out.
Next deal like this I'll probably just double-double check that I have more cash ready to go than needed, even when the lender says it's all good to go.

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

Absolutely recommend Jake Henderson on this. Wasn't really planning on using an agent but he had showed me a couple deals and so was happy to go into this with him. He proved helpful at several points and the expertise was appreciated.