EZ West 7th House Hack

[Adam Tafel]

Investment Info:

Single-family residence buy & hold investment in Saint Paul.

Purchase price: $230,000
Cash invested: $23,000

The idiot-proof "house hack", IF you'll let me get away with calling it that. 3 Bedroom 1.5 bath, 1886 build, in an up-and-coming part of St. Paul.

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

Found on the MLS. Turning point was during inspection, sewer-scope (always, always pay for these) revealed a sink-hole sewage system. Rather than pay for expensive steel pipes, the builder had opted to drill through the limestone bedrock, creating a pipeline to the city pipe. Over time these holes will expand into small caverns, and can eventually collapse. Got a major price reduction of $30,000, which was huge. "It could collapse tomorrow, or last another 500 years" -City Plumbing Inspector

How did you finance this deal?

Conventional 30/yr, 10% down.

How did you add value to the deal?

Turned a seemingly unusable loft area into a makeshift crash pad. I rent out the master on Airbnb and sleep in the "hobbit hole" for roughly half the year.

What was the outcome?

Cash-flowing and living for free! Two bedrooms are rented by friends, for $650/mo each. Master bedroom rents for $1200/mo on Airbnb, with roughly 50% vacancy. I live in an awesome house in a great part of town with two great guys, and make $500/month on top of everything. Win-win-win-win.

Lessons learned? Challenges?

Be picky with the roommate selection process! We interviewed a TON of candidates before arriving on a decision, and got very lucky with a great housemate. Sure, living for free it awesome, but a bad roommate will make the financial savings fairly insignificant. ALWAYS check references and verify income, no matter what.