Leominster duplex house hack

[Nate Ginsberg]

Investment Info:

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

Purchase price: $330,000
Cash invested: $11,550

Bought 2-family using FHA loan. Raised rent on existing long-term tenant to slightly below market rates. House hacked the other side for 15 months before refinancing out of FHA loan to reduce monthly payments - lowered interest rate by 1% and eliminated PMI. We have been paying ourselves "rent" to (A) simulate what rents we would actually get when we move out and (B) hack our personal finances by paying ourselves first, literally. Actual monthly cashflow is $700-800.

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

Rich Dad, Poor Dad - buy assets first!

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

Driving for dollars! Saw a For Sale by Owner sign in the front yard. Paid asking price with seller concession at closing to minimize cash out of pocket.

How did you finance this deal?

FHA

How did you add value to the deal?

Raised rents, landscaping, added fence and deck, major utility upgrades (water/sewer), converted sunroom from uninsulated/unfinished to true insulated 3-season room with new roof, adding updated fixtures and finishes, paint.

What was the outcome?

Still holding, moving out soon, hoping to rent quickly at market rates - there is very low vacancy in our area, especially for 3-bedroom units.

Lessons learned? Challenges?

Buy the insurance rider covering public utility connections. Be human when dealing with tenants, especially good, long-term tenants. They are far more valuable than the few extra bucks gained by raising rents. That said, if you're going to raise rents, just rip the band-aid off, and be firm but fair on your asking price.

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

Yes, Kayla Nault at Central Mass Real Estate was our broker, and she is phenomenal. She and her team demystified the buying process, which we really needed as first-time buyers. They were super responsive, pleasant to deal with, and very thorough.

[Nate Ginsberg]

@Jacqueline Gardiner to be honest I don’t know all the details of the policy, my wife found the add-on coverage. She’s great at finding stuff like that.

We had bad water pressure which turned out to be a crack in the line from the city main to the house. Had to dig up half the front yard with an excavator to pull the new line through. Total cost was around $7-8k. Our out of pocket was less than $1k thanks to insurance.