House Hacking in the DMV

[Frank Godfrey]

Investment Info:

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

This was a house hack me and my brother did. Renovated 3 of the 4 units before selling for a profit. Lived free for the two years owned.

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

Owner occupant financing, multi unit so move in one and renovate the rest to rent and live virtually free. This one was not managed well and we took the very low price property with it's non performing tenants. Within one month 2 of the 3 tenants were under 12 month leases at market rent.

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

I am a Realtor and it was brought to me as a pre-foreclosure.

How did you finance this deal?

Conventional owner occupant financing

How did you add value to the deal?

Negotiated better lease terms with 2 of the 3 tenants and evicted the other. Then we renovated one vacant unit at a time. The existing tenants moved to the newly renovated units for market rent.

What was the outcome?

A performing 4 unit, owner living virtually free and a 100% increase in market value.

Lessons learned? Challenges?

I wish I would have done a condo conversion and held the property another year as the market would have paid me 200% in the next 2 years. I would have done a better job negotiating the tenants removal prior to possession. That could have cost us the deal. It was a very tough situation.

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

I am the Realtor I use an recommend.