Our First Deal (House Hack)

[Kiel Green]

Investment Info:

Single-family residence other investment in Hollywood.

Purchase price: $260,000
Cash invested: $25,000

This was our first real estate investment and is a house hack. We purchased a single family home in Hollywood, FL that essentially functions as a duplex. We live in the 2/1 portion of the home and rent out the 1/1 attached efficiency for $850.00 a month. Our total mortgage payment (inclusive of insurance and taxes) is $1850.00 a month.

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

We got interested in real estate investing in late 2017 while we were living in a 1 bedroom apartment and paying $1800 a month in rent. We realized that at that price point we could afford around a single family home in our market.

We weren't interested in buying just a residence so we started looking for duplexes/homes with efficiencies that we could rent out and offset our cost of living.

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

We found the home on Zillow. We had set up notifications for all new listings in a certain market area. The home was listed on a Friday and we had an offer in on Saturday morning.

We attached a handwritten letter to the offer and the seller allowed us to match the highest offer, which was $5K higher than our original offer.

How did you finance this deal?

FHA loan with 3.5% down.

How did you add value to the deal?

We painted the entire interior of the house before we moved in and since have replaced the appliances, upgraded the electrical system, installed impact/energy efficient windows.

We are planning on redoing the roof and HVAC system before we convert the entire property to a rental.

What was the outcome?

The rent from the efficiency covers 45% of our mortgage and 40% of our total living expenses including utilities and internet. We are in the process of looking for our next residence and converting the entire home to a rental.

Renting out the portion we currently live in should bring in about $1800 (includes utilities/internet since the efficiency isn't separately metered).

This would bring total income from the property to $2650.00 and total expenses would be around $2200.00.

Lessons learned? Challenges?

Get a pest inspection. We discovered termites in the efficiency after closing and it cost us around $2000.00 to deal with it.

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

No.