Been discussing this topic on the forums for awhile now but just landed my first house hack, closing on 2/24 and I wanted to share details! Not closed yet but as I'll explain there is a low chance things don't work out.

Property:

Duplex in Aurora CO. Each unit is turnkey, has 4br/2ba, full basement with laundry room, separate fenced in yards, with a semi detached 2 car garage (attached to the building but inaccessible from inside the units), separate HVAC, AC and sewer lines. Potential for improved kitchens and bathrooms.

Loan:

FHA 3.5% down

5.65% rate - buying down to 5.25% for $2000 - saves $149 a month, break even in 13 months.

Cash to close: $33,914

Monthly Payment: $4396 (close estimate from lender, unsure total home and mortgage insurance)

Purchasing Story: Found the unit on the MLS, realtor reached out 48 hours after it was listed and we were told they had multiple offers. This is close to my limit of comfortable purchase price so I decided to not give an offer since I didn't want to join a bidding war. The home when through inspection, appraisal and was cleared to close when the buyer had to terminate due to personal reasons. My agent had stayed in contact with the sellers agent about the property and how I was interested if anything fell through. The morning they heard of a potential termination she contacted my agent about it and we drafted our offer. We decided that the best plan was to offer list as we already knew it had multiple offers the first time on the market. Our goal was to get the property before they decided to relist it. It worked out and we had an accepted offer that evening. We are doing our own inspection this week and close on 2/24. The best part here was I got to see the other buyers inspection, improvements and appraisal after having my offer accepted, they replaced water heaters and fixed all the big issues. So I am confident as we move forward.

Househack strategy:

The long term average market rent in the area is $2700 for this size home. I will rent one unit out as an LTR. The other unit will be my primary residence and I will rent out 1-2 of the bedrooms month to month while I live there. The home is near 2 major hospitals and the air force base so it should be an easy rental for those who want to be near work. MTR rates for a single bedroom is approx: $900-1200 (I have an MTR rental in the area and bring in $3000 for a 2br - I feel confident I can get $2000 for 2brs). The garage will be half for the LTR, and half for myself. So MTR renters will park on street (free parking) or in the driveway.

Finances: (using lower numbers)

Monthly payment: $4396

LTR: $2700

MTR: $1800

Utilities/CapX: LTR pays own utilities. Primary unit estimating $600 (will reassess after year 1).

Long Term Plan:

The first year I will break even, maybe owe a few hundred each month. But after 12-18 months the plan will be to buy a new duplex and continue renting this duplex. Whether I rent it LTR/MTR or both LTR will depend on how well it does as an MTR. The best part of that is a 4br/2ba MTR unit in this area is averaging over $4000 a month according to Airdna and that would bring monthly cashflow to over $2000 a month. If the MTR isn't working out I will LTR both sides with a cashflow around $800-$1000 a month. For a 3.5% down duplex in denver I think this could be a home run. Personally I think rates below 4% are years away, so I am planning to refinance in 5-7 years (if earlier great and hopefully to a conventional) to drop off the mortgage insurance. The one thing I need to figure out is if redoing bathrooms and kitchen down the line will create enough equity for the refinance or if I will need to put some of the cashflow back into the principal to achieve that goal. If we jump ahead 10 years and my plan works out I am hoping this property could potentially cashflow $3000 a month!

REI Summary:

Property #1 MTR : Total expenses: $2100 - average rent last year $3000 = $900 CF

Property #2 New Duplex: Potential CF after 1 year (low estimate) = $800

Total Monthly Cashflow: $1700/m

This is obviously early in the process of knowing how it will work as a rental, I am aware a lot can happen and it might not even close if something unforeseen comes up. But this is the layout of my plan and I feel confident in the numbers I have listed. Happy to answer all questions and would love people to poke holes in my plan as its a great learning opportunity. This will put me at 3 doors and I am so STOKED!

Denver, Colorado

6 Votes