Becoming a Hackmaster

[Kevin Smith]

Investment Info:

Single-family residence other investment.

Purchase price: $409,000
Cash invested: $30,000

House hack #2. Bigger house - completely turnkey at purchase. 6 bedrooms, 2 bath, 1 kitchen. We added a kitchenette in the basement to take the heat off the one main floor kitchen, and a deep freezer out back. As the owner, I am living in one of the smaller rooms downstairs w/ the kitchenette and a buddy. It is a tri level house that sets up very well for house hacking with three separate common areas and a large backyard. Month to month lease and dog friendly greatly widens the renters pool.

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

Partner and I believe in the model and saw first hand with our first investment what sort of returns were possible. We did want more of a turnkey property, where we could get it filled up and cash flowing (quite nicely) right away.

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

Redfin. We did some great under contract negotiating. The owners had massive equity in the property - and improvement/necessary maintenance negligence in the 5 years they owned it. We were able to get them to pay for a new roof and sewer line before closing, out of their equity. This was much better for us as opposed to lowering price - because we were cash poor and would not have the cash to make those big ticket updates ourselves, even with a lower purchase price.

How did you finance this deal?

Conventional, 5% down because of owner occupancy. Had to stay in my first house hack 1 year and then qualified to buy next primary residence.

How did you add value to the deal?

Under contract negotiation - props to my partner Maria Vargas. After purchase rent appeal maximization.

What was the outcome?

Fantastic! Great property. Funding our nest egg/oh sh*t fund.

Lessons learned? Challenges?

Working with a creative and investor friendly professionals is a must at this point. There are always challenges. Here is my challenge to you. Deviate from your normal investment mindset - and start thinking creatively house you can get into the game by hacking your current living situation, or investment strategy.

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

Absolutely - both were pivotal and highly recommended.
Agent - Mary Anschutz, HomeSmart
Lender - Matt Hanson, Hanson Planning Group