First House Hack With A Brand New Home!

[Howard Chen]

Investment Info:

Single-family residence buy & hold investment in Sacramento.

Purchase price: $417,092
Cash invested: $14,600

This will be my very first owner-occupied house hack, scheduled to close in early November. It is a 3br/2.5ba, purchased from Lennar Homes.

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

My landlord was selling and when I looked at the rental rates, it no longer made sense to continue renting.

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

I bought directly through a builder, I was able to negotiate the good faith deposit from $5k down to $1K. I also negotiated the deposit for the upgraded flooring and shutters from 25% down to 5%. The builder's selling agent did not budge on the purchase price because we're in such a hot market.

How did you finance this deal?

-3.5% out of pocket down payment.
-Neighborhood WORKS $20k grant towards down payment/closing costs.
-Realtor commission kick back towards closing costs.
-30 year fixed rate FHA.

How did you add value to the deal?

-I was able to secure the Neighborhood WORKS grant which allowed me to gain an instant minimum $10k equity(could be more depending on final closing costs) and no out of pocket closing costs as long as I hold for 5 years.
-I have a tenant committed to rent one of the rooms for the next three years @ $740/month.
- I plan on listing the third bedroom as a commuter AirBNB for $50-$75/day.

What was the outcome?

Instant equity and mortgage offset by $740/month.

Lessons learned? Challenges?

Lesson learned: Preparation+timing+opportunity=luck, "where there is a will, there is a way."
Challenges: Called almost 10 different lenders, through referrals/cold calling before I found a lender that would work with my DTI.

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

Agent: Inderjit Phagura of Direct Realty and Mortgage based in Rocklin, California.
Lender: Nick Street of Mountain West Financial based in Sacramento, California.