SFH Opportunity - Seeking Advice for House Hacking and Creative Strategies

[Benjamin Sulka]

Hey BP, 

I've been discussing my real estate aspirations with my family and personal network and an opportunity presented itself in no time. 

A relative of mine has a 2/1 SFH that they've been renting to a family member for 2 years now. Things have started to go down hill and the tenant is moving out once their lease is up in early summer 2024. These relatives of mine are highly motivated to sell but don't want to sell until their family member moves out. This fits my timeline perfectly since my goal for this year is to save up money and pay down debt.

This property has central air, dishwasher, a solid kitchen and bathroom as well as a view of Lake Erie. My significant other and I want to live in the property for a year and house hack while we live there by renting the other bedroom to someone we know and trust. After this, we want to either sell it or turn it into a full time rental. 

I've been looking at rent comps in that area and 2/1s rent for $1,300 with appliances but without central air. This property has central air. Trying to find extra opportunities to value add to increase the rent once we are finished with a year of house hacking. After considering all expenses (mortgage, vacancy, capex, maintenance, home insurance, PMI, etc.) the property would negative cash flow. I could offer them less than they want for the property (like I said they are highly motivated) but I'd be giving them less than what they still owe on the property.

This property also has an additional lot that can be sold or built on. I love the ADU strategy but I don't know if it would make sense to put all of that money into building one.

Would love to hear the thoughts of other investors who have rented SFH's.

All the best,

Ben