Utah sfr basement apt househack

[Laura Johnson]

Investment Info:

Single-family residence buy & hold investment in Cedar Hills.

Purchase price: $391,000
Cash invested: $33,000

Basement apartment househack.
We added a 1 bed 1 bath apartment for approximately $13,000. It rents for $1000 and is 27% of the sq ft. We are a family of 6 and live in 73% of the house for $1200/month (soon to be $950/ month after refinancing pmi away).

We bought the house under value with 5% down. Within a year we had 20% equity.

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

We wanted renters to pay half our mortgage, but needed separation between tenants and our little girls. So yard sharing duplexes were out of the question. We spent a long time looking for the perfect househack with an entrance on the side of the house and not in the backyard. Plus we needed enough room for our large family.

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

Found the home on the MLS. I had looked at it when it first came on the MLS but told my husband no way, it needed way to much work for the price. After 2 months and 2 price drops he suggested we go back. Because the neighborhood is upscale, the house is located on a super nice forested walking path and creek, and the layout is right, we decided to offer a low bid and see what happens. They came back a little higher but paid closing costs and paid off the solar panels.

How did you finance this deal?

5% down conventional.

How did you add value to the deal?

By adding a registered adu to our home, we increased the value at least $40k plus we had instant equity from buying under value. A house around the corner, same size, style and year but without such a nice lot or adu just sold for $470. We paid $391.

What was the outcome?

We are starting a trend in our neighborhood! Haha.
2 other families have since approached asking about our apt and both are currently working on their own basement apartments.

Lessons learned? Challenges?

We should have hired better contractors. I used thumbtack which I will never do again. Contractors were hard to come by because of the massive home building explosion in Utah. I need better contacts!