First investment was a house hack

[Michael Hawkins]

Investment Info:

Single-family residence buy & hold investment in Palm Bay.

Purchase price: $175,000
Cash invested: $20,000

Single Family home, 4/2 that I was house hacking. I'm no longer living there and renting out the bedrooms. Currently, I pay all utilities unless Electric goes over $200 a month, then the tenants split the difference. I may change that in the near future but haven't figured out how Id like to sort it out yet.

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

I noticed it was a good size house with 4 bedrooms, partially updated. Since I had the VA loan I didnt put any money down. I had friends that didnt like their current situation. So I bought the house, did minor repairs and cosmetics, moved them in and 2.5 years later I refinanced to a conventional with the appraisal hitting $224k. I still have one original tenant/friend. Everyone else is new and under a contract.

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

Honestly, found it on the MLS, I only negotiated $5,000 off of it but I knew it was a good deal and that I could house hack to pay for everything.

How did you finance this deal?

VA loan initially, now its a conventional so I can use the VA loan on another property when I find something good.

How did you add value to the deal?

Mostly cosmetic fixes besides the AC, ducts, insulation, Aerator for well water and a big back patio of pavers. I fixed and Stained the front of the fence, painted front door, painted the garage and sealed the floor. Nothing too major, I think Ive put maybe $20-22K into the house.

I swing by once a month to check the salts, chlorine, AC filters and to make sure everything is working as expected and to collect rent if they prefer to give a check rather than CashApp/Venmo.

What was the outcome?

Well it appraised for $224k I had paid down the debt to $159k so Ive got a solid $64k in equity. My mortgage is $1001, with another $550/m in trash, electric, salts/chlorine, internet, pest control and lawn. Plus I put at least $150/m aside for repairs and misc.

2 beds rent for $500/m and 2 rent for $650/m so that totals $2300/m. Minus the $1700/m has me cash flowing about $600/m

Lessons learned? Challenges?

The last owner did a lot of CHEAP repairs that the inspector didnt catch. However, I still feel I got a fair deal on the house and its been making me money since day 1 so I cant complain too much.

Renting by room is definitely a bit more difficult than by the house. There have not been personality conflicts yet because Im trying to rent only to similar, calm, laid back tenants. I also put together a cleaning schedule for each room to follow to keep the common areas nice for everyone.

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

No I did not.