First House Hack in Washington D.C.

[Joseph Ayoub]

Investment Info:

Single-family residence buy & hold investment in Washington.

Purchase price: $434,000
Cash invested: $38,000

My first deal was house hacking a 3BR 2.5 SFH in northeast DC that I turned into a 4BR 3BA home. The house was renovated which made it appealing for roommates and was walkable to the metro. This house had a large bonus room which I use as a bedroom and a half bath on the first floor, and after living there one year, I renovated the half bath to a full to add more value. I just refinanced and will cashflow $800/month on the deal when all rooms are rented.

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

I was interested in this deal because it was recently renovated, had off-street parking, and was walking distance to the metro, all of which make the house more marketable and attract great roommates quickly. Also, the house had a bonus room and half bath on the first floor which I saw the opportunity to turn into a second master's suite.

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

I found this deal on the MLS by working with a realtor.

How did you finance this deal?

I used a conventional loan and put 3% down. I paid for the bathroom expansion with cash after living there one year ($10k renovation)

How did you add value to the deal?

I used the large bonus room as a bedroom and converted the half bath on the first floor to a full to make for an optimal roommate situation. I also added systems in place to automatically order commonly used supplies (like toilet paper and paper towels) and have a cleaning service included with rent to make it more appealing for single room renting.

What was the outcome?

My first year, I bought the house for $434K, the monthly expenses were $2745/month, and I brought in $2675/month in rent, leaving only $70 I paid out of pocket to live there. After expanding the half bath to a full after the first year and refinancing in October 2020, the monthly expenses are down to $2090 and the house appraised for $530K. When I move out and rent out all four bedrooms, I will cashflow around $800.

Lessons learned? Challenges?

House hacking is possible in a HCOL city when you do not have much money! Do your research on neighborhoods and streets and determine how much risk you are willing to tolerate with location. When looking for a deal, try to find unfinished space, bonus rooms, or half baths to add value. Being walkable to the metro, having a home in great condition, off street parking, and a great rental ad make a huge difference. Put systems in place (like a house cleaner) to make living with roommates easy.