Investment Info:

Single-family residence buy & hold investment.

Purchase price: $240,000
Cash invested: $37,000

My wife and I used a renovation loan on our first home. Our gut rehab added 2 full bathrooms and a short term rental unit in the basement. Creative house hacking at it's best! We've added $130K in equity to the home with $37K out of pocket. The rental pays $2000-$2250 on 30 minimum stays. PITI is $1680. We get paid around $400/ month to live in 1600 newly renovated sq ft upstairs. House hacking works! I can show you how to do it.

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

We couldn't find a multi family property in a neighborhood we wanted to live in that would also accommodate our growing family. Finally we decided to seek a SFH in a desirable area that would allow us to add a rental unit. It's not easy finding that in Philly, with its attached row houses (rare to find a rear egress for private entrance) and notoriously nasty basements, but we did and it has paid off massively.

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

This was a standard sale listed on the MLS. We overpaid for it at the time but we saw so much untapped potential in it that the equity we've created more than negates the $10-20K we "overpaid" at the time.

How did you finance this deal?

With a 5% down Homestyle loan. We refinanced out two years later, dropping PMI after adding $130K in equity with construction and the "Covid bump," dropping our payment from $2200 to $1680.

How did you add value to the deal?

We gutted it. Added Central Air, 2 bathrooms, kitchen, full rewire, a basement suite and and overhauled back yard/ property egress.

What was the outcome?

We get paid $400/ month to live above our rental unit. We utilize STR on 30 day minimums to strike a nice balance between revenue and management.

Lessons learned? Challenges?

I should have spent more to soundproof between units and separately meter the basement unit. It should be full self-sufficient as far HVAC and utilities. I was out of money at the time and it's going to cost me a lot more to go back and remedy when we move onto the next one, which will be very soon. 

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

I am an agent and I have a great team around me to knock projects like this out of the park.