First Investment: House Hacking a $500k property with $0

[Matt Meyers]

Investment Info:

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

Purchase price: $517,000
Cash invested: $18,095

I'm currently in the process of closing on my first investment - a house hack - in the Chicagoland area.

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

Originally heard about house hacking from Graham Stephen and then did a ton of research the last year with the help of BP. I also read Craig Curelop's book.

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

I found this deal on the MLS. I bid $12,000 higher than listing, which would cover $10k in sellers concessions + $2k in a home warranty. After inspection I lowered the bid by $20k since I got quoted $20-$30k of work and then the seller countered with $5k price reduction. I accepted that. The house appraised for $550k as is, so I wasn't too worried about price.

How did you finance this deal?

I am financing with an FHA loan and getting $10,000 in sellers concessions plus a $5,000 tax proration, so my money out of pocket will be ~$10,000 but it just so happens my government tax refund from 2020 was $10,500 so I was able to get this with essentially $0 out of pocket.

What was the outcome?

TBD.

Lessons learned? Challenges?

It took 30 days for the seller to respond to my initial A/I letter. That put us way behind. I ended up sending them a cancellation letter one day before we're supposed to close since we were still not wrapped up on the terms. My biggest concern and why I almost ended up canceling was because they did not want to give notice to a tenant to move out before closing. The tenant did not have a lease and there were no records of him paying. He had no job or savings.

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

Ben Ratner (agent) in the Chicago land area is great.
Jordan Phillips (insurance) gives the lowest quotes and response time is insane.