(Mostly) Successful House Hack using BP Networking!

[Andrew M.]

I'll jump right into this. After having been a podcast listening, post reading, blog surfing, team finding user of BP for almost half a year, my wife and I decided it was time to use the knowledge and resources offered to start becoming do-ers. After having done a few rental and owner occupy properties, this was our first using mostly BP relationships. For that, THANK YOU! First a story, then the numbers and pictures.

It was early June and we wanted another primary residence to house hack first, then move into SFRs as rentals. Enter @TimMacy who did an amazing job from the very beginning. He had a property in the exact location we were looking at that wasn't going to quite work as a flip for a different client, but would make a great fixer upper to live in. It was originally listed at $330K, but had seen almost 300 DOM even with several price reductions to $290K. The house had great bones and location, but was stuck in 1982. We offered $231.5K, 21 day close, 5% down payment, and a beautifully worded suck-up letter with a woman's touch. Counter offer: $235K, 7 day inspection period. Ready, set, GO.

Mistake #1. We brought in 4 GCs, none of which we had done our homework on. Two came in close to each other, one was quite a bit more, one was in outer space at over $100K. Goodbye.

Estimated rehab cost w/ 10% added for over budget items: $45,000

Lesson Learned #1. Find yourself a loan officer who can make things happen quickly.

Construction started just before July 4th. Estimated completion date, August 28th.

During this time, we had the ball rolling to sell our current house hack during the first week of September. Some friends ended up buying it to use as a rental, so the date was flexible. Rolling the money from this sale, in theory, would have paid for almost all of the rehab on the new house.

My wife and I both travel for work up to 18 days a month, so this was a learning experience on working a large project from the road. For the first 7 weeks, everything seemed to be going well. Then week 8 came when the project should have been wrapping up. The contractors attitudes pulled a 180, quality starting deteriorating, and we weren't home to catch it. Demands for more and more cash above the agreed upon price by thousands of dollars. Mistake #2. I thought buying the materials, even above the contracted price, would ultimately be cheaper and quicker than hiring an entirely new crew. This went on for almost a week and was sliding downhill quickly. When their ridiculous requests stopped getting fulfilled, they packed up and left leaving us a construction zone and no other place to live but in it!

Lesson Learned #2. Take your time. Research and interview contractors. Your time, investment, sanity, and wallet all depend on it!

The second time we nailed it with a great crew. It took them 8 weeks to fix all of the problems these other guys had created, but it needed the attention.

Final numbers:

Purchase: $235,000

Closing costs: $4,097

Renovation cost: $72,069

BPO of value: $370,000

Total estimated equity: $58,834

This certainly was not a case study in how to come out of pocket with little cash (we are in the process of a cash-out refi to by SFRs), but to have the equity, experience, finding of some amazing individuals through BP, and a great home, we are ultimately very happy.

Thanks again to Tim for doing your part to hit us a home-run!