VA Loan Duplex House Hack

[Robert Orth]

Investment Info:

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

Purchase price: $189,000
Cash invested: $5,400

This is my first home and decided to do an owner-occupied, VA loan, duplex house hack. It is a two-story 4/4 with one unit on top and one below.

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

I wanted to keep my living expenses low and also have my first home purchase as something I could turn into a rental once I upgrade or find another good deal. This was the first duplex and best opportunity to house-hack I saw pop up in my local area.

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

I was working with a realtor who's a family friend but also searching Zillow and trulia for FSBO's. I happened to come across this deal on Zillow, immediately sent it to my realtor and went through the normal motion at that point. I was using a VA loan so I offered a little above asking price to get closing costs covered but the appraisal came in a little low. Seller matched appraisal and I covered my own closing costs. Seller did have to have one unit vacate for deal to work as owner occupied.

How did you finance this deal?

VA loan with closing costs covered out of pocket.

How did you add value to the deal?

I raised rent on the tenant I inherited and she has actually been a very good tenant. I raised rent from $800/mo to $870/mo over two renewals. Market rent is closer to $925/mo however I do not believe the tenant can pay that amount so I will keep it there for a little while instead of pushing her out and having to pay for turnover costs.

What was the outcome?

I am living cheap with my tenant paying 2/3's of my PITI and gained approximately $40k in appreciation over 2.5 years due to other duplexes selling in my neighborhood for higher prices.

Lessons learned? Challenges?

House-hacking is AMAZING!! Don't be afraid of inheriting a tenant if you know they are already keeping the unit clean and they make it known they'd like to stay. The only calls I've had from her were valid repair calls and once to apologize for a rather loud argument she had with her adult son that she thought I may have overheard.

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

Cindy Sheldon with Four Season's Realty is a family friend and Broker/Owner of her company. She was great, very patient with me wanting to look at several different houses, knew what my goal was in buying a property to be a future rental and would always give me honest advice on whether she thought it may make a good rental or not.