House hacking from single family to triplex

[Allen Lomax]

Investment Info:

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

Purchase price: $150,000
Cash invested: $35,000
Sale price: $250,000

Purchased as a single family and converted to a triplex. Held for 10 years

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

I had just moved to town to take a new position of Western Carolina University. The home was adjacent to the campus. It needed some work but not a lot. I immediately saw the potential to convert to a triplex while still providing very adequately for my lifestyle. It was a raised ranch. I converted the basement into two apartments. Each with private entrances.

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

I saw the broker's sign while driving around the area.

How did you finance this deal?

conventional single family financing

How did you add value to the deal?

I did a lot of cosmetics both in the unit I occupied and in the two downstairs conversions to apartments. I added a kitchen to one apartment unit and a kitchen and bath to one of the units. I added a bath to the unit I occupied. I did the largest part of the work myself. I hired out some of the plumbing and electrical.

What was the outcome?

It was an excellent investment. It cash flowed nicely and I always had good tenants. Most were students. I accepted only upperclassmen with 2.5 or better GPA and grad students. If I'd not lost my job in 2007, I'd still be holding the property.

Lessons learned? Challenges?

Even though I'm pretty handy and most everything I renovated came out quite nice, the reality is professionals still do a better job. Not only do they do it better, they do it much faster. It took me about two years to complete the apartment renovations. Had I contracted the work, I could have had the apartments rented and producing income with in a couple of months. The challenge was letting go of the property. It was for the best though as I put the profits into a fix/flip that profited.