4 Bed/2 Bath Townhome Room By Room House Hack with Partner

[Dan Mackin]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $276,000
Cash invested: $13,500

Partnership house hack with brother. I contributed the down payment and cosigned the loan. Total down payment was $12,500 and the property needs about $1,000 worth of materials for freshening up which will be done by brother and myself.

Property Basics:
4 Bed/2 Bath
Gross rents when brother leaves should be $2,800 (Verified with other owners in complex)
PITI + HOA is $1870.
Electric/Gas/Internet should float between $150-$250.
Water in included in HOA.

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

The deal was a straight forward room hack. Price point was very appealing and location has major improvements happening within 2 blocks over the next 5 years.

This property will be run as a room by room rental. During my brother's stay he will have 2 roommates and will cover the base cost differences himself.

This was a great way to utilize house hacking without having to move myself and help my brother get started at the same time.

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

MLS offer. Ended up as backup, but winning bid backed out and we moved into first position.

How did you finance this deal?

FHA 3.5% down

How did you add value to the deal?

High awareness of the property and the neighborhood location due to past transactions in the complex. Negotiated a higher concession from the seller than the previous buyer who had fell out by using creativity to get the deal done.

What was the outcome?

Purchased for $276,000 for $12,500 out of pocket with $7,500 coming back as commissions. The journey for this property begins

Lessons learned? Challenges?

The biggest challenge of this purchase was dealing with underwriting during the initial height of the Covid-19 lockdown. Clear to close took about 7 days longer than expected and wasn't fully clear until the day before closing.

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

We worked with an awesome Colorado mortgage broker named Conrad Carpenter at Canyon River Mortgage. I have used him for all of my purchases and refinances lately and he always gets it done. If we had been working with a sub par mortgage broker on this deal with all of the underwriting hiccups this would have not come through.