First Investment Property With House Hacking

[Colin O'Neill]

Investment Info:

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

Purchase price: $149,000
Cash invested: $8,500

I used an FHA Loan to get into the property. Closing costs and down payment totaled out to around 6k. After I moved into the property (upper unit), I immediately began rehabbing my unit. The lower was rented from the previous landlord, and the tenant is awesome; she just renewed her lease last month for another 12 months. Once I move out of my unit or refi out of FHA to get a tenant in sooner, total rent will equal $1770/mo and I will be cashflowing around $400-450/mo. 400x12 = 4800/yr. 4800/8500=56.47% ROI from a house hack using an FHA Loan after the first year. Awesome!!

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

After watching a lot of BP Podcasts and seeing others around me investing, I felt like I needed to save money and do what they were doing. Longterm financial freedom is the underlying 'WHY'.

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

I am on an email list with my realtor for properties that come on market in a few cities. After analyzing this deal and running the numbers, I felt like it could be a good first property for me. After inspection, I got $1500 in credits for a few items I felt needed to be replaced, which saved me $1500 in out of pocket closing costs. After satisfying all contingencies, the sellers were easy to deal with and allowed necessary time for everything, and we closed 1.5 months later.

How did you finance this deal?

FHA Loan, 3.5% down

How did you add value to the deal?

Rehabbing the unit I live in, and gained ~ 10k in equity when I closed (Appraised 10k higher than I paid).

What was the outcome?

Currently House hacking and my housing expenses are only $250/mo until I move out, which I will then be $600/mo above and beyond my expenses.

Lessons learned? Challenges?

How the real estate deal works from start to finish. Being able to pull the trigger and get into the first deal was the hardest part because I didn't know what I was getting myself into.

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

Yes, I worked with an agent, a Lender, and a personal friend who helped me through the deal tremendously. Both Miranda Zuege (Realtor) and Christian Gridley (Lender), along with the nonstop help of my close friend Chris allowed me to get through the deal seamlessly.