How house hacking can yield you a 200% cash on cash return!

[Brody Fausett]

Investment Info:

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

Purchase price: $155,000

Cash invested: $15,000

This is a home that we flipped and then kept as a rental. It has a downstairs unit as well. It is located 100 feet from college campus. We did the entire rehab for less than $10k and also owner occupied the home so were able to put 3 1/2 percent down. The cash on cash return on this home is right at 133%

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

It's location in proximity to college campus. There is a full size kitchen in the basement that doubles as a 2nd unit.

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

Popped up on the MLS. We went and looked at it day one, along with dozens of other people. We put a full price offer in and we got lucky and they accepted it.

How did you finance this deal?

FHA loan. Because we were willing to move into the home and owner occupy it while we did the renovations we were able to also rent out the basement and put a significant less amount down.

How did you add value to the deal?

We added one extra room in the basement by framing one wall and adding a closet. We also did a bunch of cosmetic updates throughout the entire place. We painted the exterior for fairly inexpensive which has allowed us to charge higher rent because it is the most up to date house on the block.

What was the outcome?

it cashflows great and has turned out to be an amazing investment.

Lessons learned? Challenges?

Overall we are pretty satisfied about this investment. One thing here that we did learn was that originally when we bought the house we thought we were going to be able to add an additional building in the back because of how deep the lot was and the zoning. We later found out that because the lot is not wide enough that we weren't able to do that.