House Hacking - The first deal

[Paul R.]

Investment Info:

Small multi-family (2-4 units) other investment in St. Louis.

Purchase price: $320,000 (10K below the lender's appraisal)
Cash invested: ~$77,000

House Hacking / Residence

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

I wanted to get out of renting and start investing at the same time. House hacking seemed like a great way to accomplish both of these goals. The tax benefits were not a deterrent either with my W2.

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

Walking down the street and saw the FSBO deal.

How did you finance this deal?

Conventional Bank Financing and had cash for full value ready to go as an inducement to seller.

How did you add value to the deal?

Light rehab on second unit's kitchen, new flooring on third floor, a fresh coat of paint, cleaning, lots of random handyman work. Fixing the previous owners rookie electrical mistakes that cut off electric to almost the entire second floor.

What was the outcome?

Still working on it. I'm hoping for forced appreciation and a breakeven cash flow situation.  The neighborhood comps are supporting at least 20% forced appreciation (60-70K).

Lessons learned? Challenges?

Neither the worst case and best case scenarios always happen. Avoid catastrophizing and overly optimistic thinking.  Information is power. I contacted the owner prior to the investor one I bought from and learned ALL about the property, which allowed me to have a stronger negotiating position.

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

David Ounanian and his recommended lender.  David knows the game has a very solid network, all of which is invaluable for a newbie.