Living For Free Near Boston, MA (Successful House Hack!)

[Kevin Kelly]

Investment Info:

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

Purchase price: $460,000
Cash invested: $23,000

Duplex in Bridgewater, MA (Short distance to BSU and commuter rail).
Unit 1 - 3 Bed 1 Bath (Rent - $2,100)
Unit 2 - 2 Bed 1 Bath (Living in unit and renting out extra bedroom for $650) - (Market rent for unit post House Hack - $1600 - 1750)

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

I spent the majority of 2019 living in South Boston paying $1,200 a month in rent for a nice apartment and living the expensive city lifestyle barely saving any money. I came across Biggerpockets and the FIRE concept in early 2019 and became fascinated by the idea and decided to go all in! I read Set For Life by Scott Trench and knew that House Hacking needed to be the first step to financial independence (Especially here in the Boston area where housing is so expensive!).

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

I found the deal on the MLS. I searched daily (even hourly) for the right deal to pop up where the numbers would work as a House Hack, and then as a cash flowing rental property after I move out. They're tough to find around here! I had a little bit of luck as I finally found a property that made sense and due to the coronavirus, there was no open house, only private showings. I contacted the listing agent and got in the day it was listed, made my offer, and got accepted the next morning!

How did you finance this deal?

I financed the deal using an FHA loan and put 5% down. I plan on refinancing to a conventional loan in a year or so and potentially repeating the process.

How did you add value to the deal?

- Unit 1 rents were below market value. New tenants moving in later this year will pay a higher rent.
- Unit 2 bedrooms needed TLC. Repainted, fixed radiator covers, replaced carpets.
- Future opportunity to renovate bottom unit and replace back decks to increase rent and increase value of property.
- Wrapped closing costs into the loan (Less money down!)

What was the outcome?

Current tenants in bottom unit are rented out by the room but will be moving out in August. New tenants will be on 1 lease. With renting out the bottom unit and extra bedroom, I am able to live for free, which allows me to save more money for my next property. Accounting for all rental income, PITI, monthly maintenance, Capex, vacancies, property management and the possibility of refinancing (lowering PMI and monthly payment), the property should cashflow roughly $400/month post House Hack!

Lessons learned? Challenges?

- Don't listen to everything the seller's agent tells you! I thought I had a pretty good relationship with the seller's agent throughout the transaction but some of the things I requested/asked about were not completed that the agent said were taken care of. Trust but verify!
- Check the electrical panels! Some of the common area utilities are on unit 1's electric meter (sump pump, shared washer/dryer, lights, etc.). I need to include electric in the monthly rent for that unit moving forward.

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

My Lender! I was able to get up to 55% DTI and locked in a 30 year fixed at 3.00%. He was responsive to all my questions, gave me updated pre-approval letters for all offers I made within a few hours of request, and made sure I got the best available deal out there. I highly recommend him. Message me if you'd like his contact info!