1st Time Investor - House Hack Multi-Family Unit - Worth it to buy ASAP?

[Jacob Lopez]

Hello BP Community!

I have recently located an ideal MFP in the Chicago suburbs (Bellwood) that I would like to invest in. The property overall is in nice shape with some work needing to be done on replacing carpets, some painting, and or replacing wallpaper (at least from what I could tell from the MLS photos).

The property is listed at 250K, and with some TLC on the units I could charge a reasonable amount for rent of the other unit I will be leasing to someone else.  

Even though this is not a full analysis of my research on this property, would this be a good investment regarding the condition of the property, the location, and the quality of tenants I may be able to attract? 

[Vitaliy Volpov]

Hi Jacob!

I don’t know the Chicago market so I can’t speak to that aspect of it. But, I do want to write to encourage you as house hacking a duplex is exactly how I got started. I bought mine for $230k. Just like this property, mine needed a very light remodel: new carpets, paint, a few minor other fixes. At the time I bought it, both units were renting for $750/mo which was under market for the area where it is located. I asked the seller to deliver the property vacant because I wanted to do the renovation right away which would not be possible with tenants in place, pick my own tenants, and charge market rent. The seller agreed and it worked out very well. I ended up moving into one of the units after the remodel (I did the painting myself and paid Lowe’s to install the new carpets) and rented out the other unit for about $1000/mo. 

I am very glad I pulled the trigger as this first house hack allowed me to begin to feel comfortable owning and managing rental properties. I continued investing in more multifamily properties, eventually partnering up with another investor and buying using the BRRRR strategy. I left my corporate job 9 years after I started with this one house hack and today I own 160 units. I credit it all to pulling the trigger on that first deal, punching fear in the face and doing something most people never have the courage to do.

Some questions you should consider and know the answers to before deciding whether this deal will make a good house hack for you are (1) is it in a safe neighborhood? (2) how is the school district where it’s located is rated? (3) will the space and features it offers make it comfortable for you to live there for at least one year? (4) what are market rents for each apartment after renovations? (5) will the property cash flow or at least break even after you eventually move out of the unit you will be occupying?

Hope this helps! Feel free to message me directly if you want to discuss any aspects of house hacking or the BRRRR strategy I used to scale.

Vitaliy