Househacking A Duplex in Washington Twp

[Mike Bonadies]

Investment Info:

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

Purchase price: $239,000
Cash invested: $13,000

I purchased a Duplex from two gentlemen that were initially trying to househack but due to family circumstance had to move to a different state. They bought it as a rehab-to-househack and the property was sold to me the rehab had just recently been finished. I bought the duplex with a FHA mortgage so I had a very limited about of money vested into the deal.

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

South Jersey is a gem for real estate investing. Outside of high taxes a lot of real estate prices actually mimics midwest pricing but with East coast rents. This deal allowed me to come back to South Jersey.

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

It was a pocket listing. My RE agent found it before it was going to go live on the MLS.

How did you finance this deal?

FHA Mortgage

How did you add value to the deal?

I didn't really add value to the property. Where I did add value is understanding the rental market. Initially I was told I would get $1200 a unit for this place. Since I did product pricing for a living I took a at the market and saw that the rental market had what we call a bi-mogul curve. The low end was well served and the high end was well served but the middle was wide open. This deal serviced it perfectly and I connected the two getting premium rents ($1400 a unit).

What was the outcome?

I'm still house hacking here today. I'm a few hundred dollars out of pocket but if I were to refinance and move out I would easily be bringing a $250 to $350 home and financial accruals.

Lessons learned? Challenges?

One lesson I learned is that you don't know what you don't know and you need to get started to figure it out. Now that I've been living her for a bit I now know the craftsmen ship was a tad sub-par. I probably overpaid on the house by about $10k as I've had to fix things in year one. That said I would repeat this in a heartbeat as I've learned valuable lessons.