Buying a house at 23 (House-Hacking/low money down)

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Buying a house at 23 (House-Hacking/low money down)

Janosch Spohner
New to Real Estate · Cumming, GA · Member since 2019 · 8 posts · 2 votes

Investment Info:

Single-family residence other investment.

Purchase price: $246,000
Cash invested: $10,000
Sale price: $246,000

I bought this house as a Primary Residence for my GF and I to live in. We are doing the most basic of house hacks, renting out 2 of the rooms which does not cover everything but it has made our living expenses super cheap for North of Atlanta. My GF and I split what is left after the rental income which is about $300/month, utilities included. It's very hard to find a decent apartment around here for under $1,000/month so we are super happy with it so far.

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

The bigger pockets podcast talks about House-Hacking frequently but also Graham Stephens YouTube channel talks about it which is where I think I heard of it first.

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

A friends mom was a Real Estate Agent and helped us find the home, we didn't do too much negotiating, it was listed at $250k, we offered $240k and ended up meeting at $246k where the sellers paid closing costs.

How did you finance this deal?

We used an FHA loan where we put 3.5% down, I didn't actually have enough for the down payment so my dad lent me money to cover that which I will have paid back to him in full by the end of next year.

How did you add value to the deal?

We are slowly doing some upgrades to the house and yard that might add value to the right person but really this house was turnkey, ready to live in and we are just letting our room mates help us cover the costs. We are not really looking to add that much to the house.

What was the outcome?

I have lived here for about 8 months now and it has been amazing. We save a ton of money on living expenses, we are building equity, we are enjoying the house with the big yard & Garage. My girlfriend is looking to get into a medical school in the next 2 years though so this house will likely end up as my first single family rental while I try to House Hack a duplex or triplex near whatever med school she gets into.

Lessons learned? Challenges?

Just learned a ton about real estate in general, financing, inspections, all that stuff. I have never been exposed to any of that so it's been awesome and I am looking to continue learning as I keep growing every year both financially and as a person.

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

Nilma Baez was the agent that we used although she only works with sellers now. The inspection was done by Dana Home inspections and I thought they did a great job.

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  • Mitchell Toney
    New to Real Estate · Cincinnati · Member since 2020 · 19 posts · 14 votes
    6y

    Awesome job man! I'm looking to do the same at 23, probably looking at a duplex/triplex but very similar aspirations nonetheless. Can you provide some insight as to how being a landlord is for your first property? What tenant management software or techniques do you use? Have you had to deal with any maintenance via the tenants, and if so, how are you dealing with those requests? Thanks so much man, sorry for all the questions, and congratulations on your first property!

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  • Janosch Spohner
    OP
    New to Real Estate · Cumming, GA · Member since 2019 · 8 posts · 2 votes
    6y
    Originally posted by @Mitchell Toney:

    Awesome job man! I'm looking to do the same at 23, probably looking at a duplex/triplex but very similar aspirations nonetheless. Can you provide some insight as to how being a landlord is for your first property? What tenant management software or techniques do you use? Have you had to deal with any maintenance via the tenants, and if so, how are you dealing with those requests? Thanks so much man, sorry for all the questions, and congratulations on your first property!

    Thanks Mitchell! Honestly, it's been super good so far (8 months ish) we didn't know any friends who would want to move into the other rooms so we posted pictures of the rooms for rent on Facebook marketplace and found potential tenants that way. I asked people who messaged me about the rooms just a little bit about themselves, what they were like, and if they'd be able to show me that their income was at least 2.5 x Rent. After that, we then invited them over and we all got to know each other, one conversation lasted about 30 minutes and the other was almost 2 hours haha. It was all super informal since they'd be our roommates and I didn't want it to feel weird but I was clear about our cleaning standards in the home, rent needs to be on time or there will be late fees, utilities are split between the number of people in the house, that kind of stuff. All of which is covered in the Month to Month Lease that I had them sign.

    I don't use any tenant management software, I don't think it's necessary for my situation, I collect rent on the 1st of every month using Venmo. I typically let them know how much utilities are a couple of days before and then they send the full amount to me on the 1st, no late payments yet! I have my Mortgage payment set up on the 4th, Venmo typically takes about a day to get to my checking account so that's worked out well.

    They haven't caused any maintenance to pop up, the house was in awesome condition when I bought it and it's stayed pretty much about the same besides some of the projects my GF and I have done around the house. There is a clause in my lease that states if they cause damage they must pay for it or they will lose their security deposit which is 1 month worth of rent. I have both of those security deposits sitting in a HY savings account earning me a little bit of interest every month but if they decided to skip out on Rent one month, I can use their security deposit to still pay my mortgage. And since it is month to month, I can start the eviction process within a matter of days (in Georgia) of not receiving rent, but hopefully I won't have to do that.

    Both tenants are girls, they are clean, quiet and respectful so they really are really good Roommates/Tenants. My GF and I are looking forward to having our own space, I will admit, having room mates is not horrible, but it would be nice to have our own place. However you gotta start somewhere and this has been a good place for me to start in Real Estate investing. Hopefully in the next year or so I can figure out a duplex or triplex for us to live in that actually cash flows too! While keeping the current house as a cash-flowing single family rental.

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