House-Hack Home Run - Real Estate Is Amazing!

[Tristan Toliver]

Investment Info:

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

Purchase price: $265,000
Cash invested: $50,000

A three-unit, value-add property that I house-hacked. Only one unit was rented below market when I purchased.
I was able to renovate the property, raise rents, and get it fully rented out. I am now living in the property and getting $2400 a month in rent and my mortgage payment is $1,700.

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

I liked the idea of buying a multi-unit property with owner occupied financing to limit the downpayment out of pocket and being able to rent out the other units to offset the mortgage payment.

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

I found it through the MLS. Negotiated with the seller after getting an inspection done. Bought it for $20K below asking price with a $9K credit at closing for repairs.

How did you finance this deal?

I had to put 5% down for a Conventional mortgage and received a $15,000 grant from the city that went towards the downpayment. My portion of the downpayment was from saving money over the course of a couple years.

How did you add value to the deal?

I rehabbed the two vacant units, added curb appeal and got the building fully leased.

What was the outcome?

I currently live in the building and it is cash flowing $700 a month. I am putting all the cash flow aside for expenses and treating it as breaking even and being able to live for free. I recently got an appraisal done and have $250K of equity in the property and close on a HELOC next week. I plan on using that money to buy more deals in the area.

Lessons learned? Challenges?

Rehab will take longer than you think and cost more than you think!
COVID was a challenge since I closed on the day that everything shut down. Pretty crazy.
Set expectations for contractors. Do three withdrawals for a project.
Plan on things going wrong. That way if they do, you already planned for it. And if they don't, it's a pleasant surprise.

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

None to recommend!

[Tristan Toliver]

Thank you, @Bruce C.! 

I am super excited to see the hard work within the past year pay off. And yes. I plan on using that HELOC as a downpayment on the next property. However, I'm debating just using it for a downpayment on an investment property rather than a house hack. In my market, I can put 20% down at about 30K-60K on a 2-4 unit. Still planning for the next move so I'm open to a lot right now. Thanks again for the response!