My first house hack 6 years in, you should do it too

[Stephen Girard]

Investment Info:

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

Purchase price: $92,000
Cash invested: $23,000

Fully rented when purchased then turned into house hacking. I learned learned how to manage renters and maintain the property. I am currently adding value to increase rent in the future.

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

I was scouring the MLS for a property that would allow me to live rent free to invest in other deals with my income. This property was on the market for a long period of time and I was able to get it at a great price.

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

I looked on multiple apps I had and never came across this property. My grandfather found this in the newspaper and that turned into an offer within days. It was weeks away from foreclosure due to poor property management. The negotiations were simple as it had been on the market for months and the price was cut several times without any offers.

How did you finance this deal?

This was a unique situation and was not able to be financed with conventional financing. The loan ended up as a commercial loan with 75% LTV. I talked to at least 10 lenders and most of them turned me down. Then one day it hit me, go to the lender that had the loan with the previous owner. They feared a foreclosure if they didn't make this happen so I was able to easily secure the loan.

How did you add value to the deal?

I added value and increased rent by adding things such as appliances, laundry, flooring and central AC. I wanted my renters to pay rent, not spend money on appliances or at the laundromat. They were happy with the rent increase in exchange for the improvements. The central AC was a little easier for me because that's my profession.

What was the outcome?

The property has been profitable since the first day. I still live in one of the houses and I have great renters that never plan to leave.

Lessons learned? Challenges?

Becoming neighbors with tenants makes it harder. You see the financial decisions they make such as buying a new car then being late on rent. Sharing a beer with the neighbor makes it feel like you shouldn't bring up the past due rent.