House Hacking a Duplex with VA Rehab Loan

[Jun Shin]

Investment Info:

Small multi-family (2-4 units) other investment in Virginia Beach.

Purchase price: $175,000

Duplex house hack with the VA Rehab Loan. Purchased a foreclosure for $215,000 ($175,000 purchase price + $30,000 renovation cost) with 0% down payment. Currently living for free by renting out the other unit and a room in my unit. Projected cash flow of $300 upon moving out and renting out both units.

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

Upon reading "Military House Hacking" by Active Duty Passive Income, I was convinced that house hacking was the best way to get started in real estate investing as a newly active duty service member with not much capital. By utilizing the VA Rehab Loan, I was able to purchase a duplex and fund its renovation with 0% down payment.

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

Prior to its listing, I've been working with an agent that I've met up at a local REI meetup who understood my plan to househack. When the deal was listed, we went to the property to walk through it, and decided to put an offer in the very same day it was listed because the numbers made sense, and there was a lot of value-add opportunities. Although there were other investors with higher bids, I was able to get the duplex under contract because I was applying as an owner-occupant.

How did you finance this deal?

VA Rehab Loan. 0% down payment.

How did you add value to the deal?

With the VA Rehab Loan, I was able to roll $30,000 worth of renovations into the mortgage loan. It covered new roof, new painting throughout, new windows (Unit A), new flooring (Unit B), kitchen remodeling (Unit B), and much more.

What was the outcome?

Today, I am living for free by renting out the other unit, along with the spare room in my unit.

Lessons learned? Challenges?

A lesson I learned is the importance of building the right team. My agent, lender, and contractor understood the investing aspect of this deal and were all on the same page. They helped me navigate through my first deal.

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

Having Alex Winfield as my realtor was the key to the success of this house hack. Not only did he understand the ins and outs of the VA Rehab Loan process, he personally helped me run the numbers and estimate the renovation costs. Robert Hill from Atlantic Bay was a phenomenal lender who was able to walk me through the entire process from the start to finish without any confusion. Mark Kelley was a great contractor who was very fair with pricing and met the deadline without any problems.