Bought in 2003 as primary residence with a couple buddies. We all lived there for about 6 years, then one guy moved out to get married, so buddy #1 and I bought out buddy #2 to become 50/50 owners, then I bought out buddy #1 when he moved out in 2013 to become the sole owner. Rented out the other two rooms for the next few years, then moved out in 2017 to do a $100k remodel and then converted it into a short-term rental on Airbnb. Finally sold in 2017 to roll into other investments.

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

This "deal" happened organically. I bought the place with friends in 2003 at the age of 27 with no intentions of turning it into an investment property. It was the series of events that followed from that, along with the experience I picked up along the way that turned this into a money-making venture for me.

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

My two coworker friends and I decided that it made more sense to buy than rent, so we started looking for places in Newport, close to the beach, the restaurants and the bars. This was the first place we looked at and it was the rooftop deck that sold us. The previous owner was an NBA player looking to make a move, so we were able to make a quick offer, which he immediately accepted.

How did you finance this deal?

We pooled our available cash to put down 20% ($152k), then financed the rest with a 5/1 ARM loan (figuring there was no chance we'd stay more than five years...little did I know I'd own it for almost 17 years).

How did you add value to the deal?

Mostly small improvements along the way, but the biggest value-add project was in 2017 when I did a fairly major remodel, adding a front patio, redoing all floors, both bathrooms, added air-conditioning, etc. Total cost was just under $100k.

What was the outcome?

After many ups and downs along the way, none of which I was too concerned about, mainly because this place as "home" first and foremost, I was happy to have built up a good chunk of equity, through principal payments and appreciation, which I was able to roll into my next investments. House-hacking and Airbnb cash flow along the way was the icing on the cake.

Lessons learned? Challenges?

Be patient. This "deal" rode the real estate wave before 2008, making each of us seem like geniuses for buying, then crashed along with everything else during the housing crisis. Patience paid off though because it eventually came back and I was able to sell it for a nice profit after holding it for so long.