my first house hack landed me 89k in equity

[David Olsen jr]

Investment Info:

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

Purchase price: $145,000
Cash invested: $7,000

My first deal that was purchased solely with the intent of lowering my living expenses by having my tenants cover the cost of the mortgage. I went in knowing absolutely nothing about owning a home let alone being a landlord, and could not have asked for a better outcome!

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

I was paying about $750 per month to share an apartment with my best friend when I thought "why don't i buy a house? we can have more space for less money, and by the time he's ready to move out i should be able to afford it on my own". With absolutely no more knowledge than that, I went and got prequalified for a 150k loan.

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

I found this deal on the MLS. It had just been relisted for 20k less after financing fell through for the last buyer. I went in at asking price because I had been beaten on the last three houses I had tried to purchase in the weeks prior. After a home inspection I requested for 10k off to fix the roof which I rolled into a 203k loan, and then had to ask for a seller assist to cover the closing costs because I wasn't able to afford them

How did you finance this deal?

I used an FHA 203K loan from a local lender, and a 6% seller assist to cover closing costs

How did you add value to the deal?

I replaced the roof when I purchased the home, and remodeled the one bedroom side after my tenant had to be removed for not paying the rent.

What was the outcome?

Shortly finishing up the remodel and paying off the loan I had to take out for it, I learned that FHA loans never lose their mortgage insurance, and decided to try to refinance into a conventional loan with the equity I had in the property. All I can say is that all of the financial struggles from the last two years became worth it when the appraisal came back at 235k giving me 89k in equity at the time. I have since moved on to my next property and have fully rented this one out.

Lessons learned? Challenges?

I learned that the most important thing when it comes to real estate is to get started. I went in with the goal of reducing my cost of living, and came out with the knowledge I need to finally start on the road to financial freedom.