My first property - "house hack"

[Nathaniel Thomson]

Investment Info:

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

Purchase price: $270,000
Cash invested: $22,100

First investment property. Purchased SFH with set up as two units. I "house-hacked" for several years, living out of one unit, renting other. Initial rents for each unit was $750 and $850.I'm managing myself for now, but talking to property manager now after going through eviction :)

What I have not been accounting for is repairs or cap ex. I'll be getting into those details on my future deals.

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

I was attracted to the "owner occupied" aspect of property. Additional "opportunities" of the property include 1.99 acres in R-2 zone. I had an engineering firm draw up plans for another 4 potential lots on the land, which may be a good exit strategy.

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

Zillow. I randomly hit up the listing agent and was referred to another agent. I've been working with this agent since to also purchase my primary home in the area.

It was on the MLS over 200 days, and I asked for 10% off the list price, had seller pay for around $13k in repairs, and seller paid about $10k of my closing fees. They were motivated to sell. He was an older gentlemen selling off property. I should go back to to him now and see if he's got any other properties for sale!

How did you finance this deal?

VA Loan. I was active-duty Navy at the time. I did put around 10% down.

How did you add value to the deal?

Cosmetic paint. Added fence. New roof. Added W/D to one unit. Added dog run in back. Laminate floors. Painted cabinets. A few new appliances.

What was the outcome?

2 unit multi-family. Took rents from $750/850 to $1420 and $1495. Great cashflow!

Gross Income: 2915
Expenses : 477 (Elec, Water, Waste, TV, Internet)
Mortgage: 1387

Cash Flow: 1051

Lessons learned? Challenges?

- The VA loan forced me to remove the 2nd meter, and replace with a single. This is a HUGE mistake. The biggest pain is the "utilities included"; however, I'm somewhat stuck at this point unless I want to go back to the county and replace the panels. We have window A/C's, and they suck down power. Also, electric baseboards... This cost is still transferred to tenants through rent price, but if they were to set A/C's to 60 degrees and leave them going all day, there is little I can do.

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

Agent: Laura Merson in Severn, Maryland -> she is awesome and is an investor herself. Has a keen eye for "opportunities" and very patient on the hunt.

[Nathaniel Thomson]

@Brent Paul Thanks!

@Laura Casillas You're welcome, I think being a "landlord by default" helped me make the natural transition a lot easier. I was a landlord with only one tenant. Fortunately they were a fantastic tenant. I'm sure there are hundreds of posts about picking the right tenant, and I can't stress that enough. If you pick a good tenant, you may end up with a great neighbor and live for free - what's better than that?