House Hack. Getting a foot in the door.

[Dana Lively]

Investment Info:

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

Purchase price: $440,000
Cash invested: $64,176

This is a house hack purchase on an up/down duplex in Ogden, UT. It was a very competitive market at the time of purchase.

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

Buying a duplex we can house hack is ideal for us. Being a family of four with young kids, we wanted to get into house hacking. This will be a great start to be landlords as well as be able to put in some sweat equity on our half of the duplex (the other half is already updated).

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

The duplex was listed on the MLS. We made an offer within 3 hours of the listing going live, I assume we were the first offer. The duplex was listed at $449,900. We offered $480,000 on an FHA loan with a guaranteed $15,000 above appraisal value up to $480,000. Our offer was accepted! Then the appraisal came in on the property at $400,000...The owner did not want to sell at the price of $415,000. We settled on $440,000.

How did you finance this deal?

An owner occupied FHA loan with 3.5% down. Since the appraisal was only for $400,000 we needed to supply the extra $40,000 in cash in addition to the down payment of $14,000, plus prepaid escrow and closing costs. We used $36,000 from our savings and pulled $12,000 from our investment account to finance this deal.

Lessons learned? Challenges?

There was obviously a lot of cash brought to the table for a mortgage that will have PMI. That's quite unfortunate. With the market the way it is, we decided it was worth the investment in the long run. Since we will be living here, our portion of the mortgage will be minimal and we will be able to save money quickly to replenish our savings and buy again.

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

Yes, highly recommend Eric Trostle - Realtor.