Owner Occupied SFR - House Hack - Full Time Rental

[Dan Amato]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $205,000
Cash invested: $60,000

I was 26 and thought I knew everything. In reality I didn't know anything except that I hated paying rent. I just knew that I wanted a house in a good area for resale or rent and that I wanted to be able to eat after paying my mortgage. I looked at about a dozen properties in one day, found one that was acceptable for $220k, offered $205k and was under contract. Looking back, I offered too much since he never countered. A 1200 sqft 3/2 in a great school district.

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

Honestly when I went into this investment it was from a place of hating paying rent. I'd come from a city where I was paying high rent and was moving back home. I thought I knew everything about real estate but in reality I knew nothing. Luckily I knew enough about the market (my hometown) to know that if I bought this house or others I was looking at, it would be great for resale or rental based on location.

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

My realtor and MLS. She advised writing a letter with the offer. I thought that was ridiculous (because I thought I knew everything) but I did it anyways. My dad advised me not to ever offer full price so I offered $15k less. Seller accepted.

How did you finance this deal?

I used a traditional 20% conventional mortgage. In addition, my MLO knew of a first time home buyer incentive from the state and found me $15k cash to use for down payment or closing costs. It got put on as a 2nd mortage that fully amortizes over 5 years with no actual payments.

How did you add value to the deal?

$15k from the state was put back into the property immediately - took a wall out, new floors, repainted the whole thing. Took 7 old dying oak trees out. Bagged hundreds of bags of leaves. Had the backyard sodded. Finished fence. One of two sheds removed. Eventually replaced dishwasher and clothes washer. Repainted kitchen cabinets. Replaced many lights and all fans. Floors, fence and trees contracted. Everything else for most part DIY. House hacking helped fund a lot of the small improvements.

What was the outcome?

I started listening to BP and turned this into a house hack. Now I am moving out of state for work and I have turned this into a cash flowing full time rental. More importantly, I am humbled and confident at the same time. If I had read ONE book or listened to ONE podcast I would have bought a duplex or triplex as first home but I made this property work for me regardless and learned so much about real estate along the way.

Lessons learned? Challenges?

So many. Taking action was biggest lesson learned. Every time I would actually do something - decide to post an ad for a roommate; pick up the phone to interview property managers when I decided to make it a full rental due to new job out of state; repaint cabinets - every single time something good came out of it. I made mistakes literally every step of the way but none of them killed me and the outcome always ended up positive. IF YOU'RE NOT UNCOMFORTABLE, YOU'RE NOT GROWING.

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

Alison Pedersen - Remax Realtor. Cindy Branch - Regions Bank MLO.