Live-in Flip / House Hack Combo

[Connor Brausen]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in South Saint Paul.

Purchase price: $217,000
Cash invested: $14,000

I bought a duplex! The upper unit was recently re-done and the lower unit hadn't been touched in over 10 years. I found tenants for the upstairs (2br 1ba ~1000 sq ft) at $1,250/mo and moved into the lower unit (1br 1 ba ~700 sq ft) to fix it up. My mortgage payment with all PITI is $1,350/mo leaving my monthly housing cost about $100 I am slowly fixing up the unit and hope to buy another small multi-family home in the summer of 2019 and rent the lower unit to provide significant cash flow.

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

Rich Dad Poor Dad and Bigger Pockets Podcasts inspired me to pursue early financial freedom through real estate investing.

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

I found this deal on the MLS only to find it taken down the next day. I tracked down the owners information and sent him a letter in the mail. He reached out to me and I drafted an offer for him as a FSBO. I used the commission I would have been entitled to to negotiate seller contribution towards closing costs (and thus avoided receiving income from the transaction as an added tax benefit).

How did you finance this deal?

I received pre-approval from 4 different lenders and upon writing the offer, asked for good faith estimates and took the best offer. This ended up being a 5% down conventional loan at a competitive interest rate. The down payment came from saving up and living with my parents for a year after graduating from grad school.

How did you add value to the deal?

I immediately installed a dishwasher and multi-split air conditioner in the upper unit and found tenants to move in and help pay the mortgage. I then moved into the lower unit to do a live-in flip. In that unit I have repainted, put in new carpets, and restored it to a livable situation. I still hope to add new flooring to the kitchen and bathroom and install permanent air conditioning before moving out and renting the lower unit.

What was the outcome?

Still pending, but I am optimistic that this will be a successful long term investment that should be able to achieve consistent cash flow.

Lessons learned? Challenges?

Far to many lessons and challenges to list. I am learning something new every day from what features add the most value to a rental to how to repair a boiler. Learning what things I can fix myself and what things I need a contractor for has been the biggest challenge for me thus far. I tend to bite off more than I can chew but I take each challenge as a learning experience.

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

Kevin Yamaya at Bell Bank provided excellent service and gave me a mortgage that was significantly better than his competition.
http://www.kevinyamaya.com/