My first investment property!

[Luis Sotomayor]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $300,000
Cash invested: $23,000

This is my first investment property which I am house hacking, and it is the first step to a life-long journey. The house is under construction and will be ready in May.

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

After listening to the Bigger Pockets podcast and reading a couple of books, it was obvious that I had to house hack. I understood the immense power of this strategy and what it will mean for my future in real estate. I am in my early 20s, single, and used to living with roommates so it was a no-brainer! I will live in it for a year then rent it out and find another property to house hack. The property will give me a 12% return in the first year of renting. 

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

This is a newly constructed home. I started looking for properties as soon as I moved to the area. I rented an apartment for the first year while I saved for the downpayment and found the right property. I got familiar with the houses in my area which made it easy to spot good deals. The builder put $11k towards closing costs and after analyzing many "worst-case scenarios", I concluded that it was the right investment.

How did you finance this deal?

I saved a lot of my income for one year and also got a HELOC on my parents' property in case I was short by a couple of grand. Even if I do not use the HELOC, it will come in handy for future deals.

How did you add value to the deal?

I am advertising the house in a way that adds comfort and value to my tenants as well as to me. The house has 6 rooms, so to create a comfortable living space, I plan to have two tenants, who will each get two rooms. This works great since many people are working from home and could use office space. They will each have a personal bathroom as well. I will add improvements to the house while I live there.

What was the outcome?

To be determined!

Lessons learned? Challenges?

I have learned so much and the house is not even built yet. I learned what it is like to do your due diligence and get familiar with a market. I learned to mention real estate in conversations with strangers. This has opened a lot of doors. I found out that a coworker has a few rental properties and we get along so well and he has since become a great mentor and accountability partner. One challenge I am facing right now is finding the right tenants. Facebook marketplace can be very frustrating.