first house hack

[Robby Sanchez]

Hey everyone. Kind of a long post. 

I have a master plan that ends with me becoming a general partner in multi family deals and eventually becoming financially free. I will use my knowledge in the home inspection field, owning and operating my home inspection business, the relationships i will make during that time, my experience in being a landlord and my knowledge as an licensed electrician and home inspector to help convince my investors that i am serious and have the skin in the game to get deals done. But right now, i currently own a SF in KY and am house hacking a duplex in round rock Texas. This Duplex was built in the 80s and has good bones but the HVAC systems will need to be replaced soon and there has been no major updates that have been done but this is one of the reasons why i bought it. i wanted to get the experience of being a landlord and renovating  and managing multiple properties. but i have a few questions pertaining to the duplex house hack. I'll tell you guys what my plan is and you let me know what you think. My plan is to invest quite a but into this duplex during my stay. (plan on staying here for a couple years and then moving into my own home). At the end of the two years i hope to have most of the renovations done. I don't plan on doing a whole bunch of renovations but i do plan on updating the kitchens and re-insulating the attics and updating lighting and painting the inside. now for my questions...

-should i just bite the bullet and pay for the new HVAC systems? i really want to leave this duplex in a solid position when i move out and rent it. i realize that things WIILL break but i just want to make sure the big ticket items are taken care of.

-should i use savings to pay for the HVAC if i do end up getting new systems? I have the option of pulling out a HELOC from my home in KY that could cover the amount for both HVAC systems. and if i do that i could most likely use the cash flow from when i move out to make the payments on the HELOC. (not counting on it but just brainstorming)

-or should i focus on remodeling everything else except the HVAC? 

-should i aim to sell the duplex? or keep it? I kinda want to keep it so i can use the equity to scale up. 

Thanks for your input everyone and i look forward to hearing your thoughts. 

[Robin Simon]

Real Estate is definitely not just a "numbers analysis" and you are definitely thinking about things the right way - but I think a good next step for you would be to spend some time putting a lot of this stuff into a (very) basic financial model/spreadsheets mapping out all the potential costs and estimates on effect (effect on value, on exit, different scenarios) - I think getting started with that framework should help with these decisions immensely

[Anthony Swain]

@Robby Sanchez

I like your long-term thinking and master plan. It sounds like you have a lot of transferable skills in the real estate industry. My only suggestion would be to keep growing your network with other multi-family investors because that will play a big part too. 

As far as your duplex, I'd say to evaluate your options for overall return. Unfortunately, ACs are not massive ROI movers, because people just expect them. If you replace them now, then hopefully less headaches going forward.

For example, I had to replace a roof on one of my duplexes, so I asked the roofer for a combo deal on another duplex with an old roof to get a better deal. Now (knock on wood) I won't need to worry about either roof for 15-20 years at the least. I'm sure similar logic can be applied to your HVAC situation. However, maybe selling to capture that equity can help you on your bigger multi-family investing endeavors. 

Good luck with your decisions Robby and keep us posted.

[Robby Sanchez]

Quote from @Anthony Swain:

@Robby Sanchez

I like your long-term thinking and master plan. It sounds like you have a lot of transferable skills in the real estate industry. My only suggestion would be to keep growing your network with other multi-family investors because that will play a big part too. 

As far as your duplex, I'd say to evaluate your options for overall return. Unfortunately, ACs are not massive ROI movers, because people just expect them. If you replace them now, then hopefully less headaches going forward.

For example, I had to replace a roof on one of my duplexes, so I asked the roofer for a combo deal on another duplex with an old roof to get a better deal. Now (knock on wood) I won't need to worry about either roof for 15-20 years at the least. I'm sure similar logic can be applied to your HVAC situation. However, maybe selling to capture that equity can help you on your bigger multi-family investing endeavors. 

Good luck with your decisions Robby and keep us posted.

 Thank you for your reply! I have been going to meet ups and trying to network with other investors/operators but i find it difficult to keep the relationships fresh so to speak. what are some techniques you think i can use to let the people i meet know that i really would like to keep in touch with them and continue the interactions? TIA

[Anthony Swain]

Follow up. Follow up. Follow up. Actually do what you say you will. Show that you’ll add value. 

[Sarita Scherpereel]

I'm terrible. I wouldn't replace or changed the HVAC system until I'm ready to move out of the property OR it breaks. Or maybe you are. I'm lost in the many hypotheticals here. I don't understand why you need to do what seems like extensive work on the HVAC. Does is need new ductwork? Condenser? I'm from Houston so I understand the magnitude of having a working AC. 

 I agree that a spreadsheet might be helpful to track the cost on this. And create a clear picture for what is a head. 

My clients reach out years after their purchases to run through things like this because we know their property and deal just as well as they do. Have you sought advice from your realtor on this? 

[Robby Sanchez]

Quote from @Sarita Scherpereel:

I'm terrible. I wouldn't replace or changed the HVAC system until I'm ready to move out of the property OR it breaks. Or maybe you are. I'm lost in the many hypotheticals here. I don't understand why you need to do what seems like extensive work on the HVAC. Does is need new ductwork? Condenser? I'm from Houston so I understand the magnitude of having a working AC. 

 I agree that a spreadsheet might be helpful to track the cost on this. And create a clear picture for what is a head. 

My clients reach out years after their purchases to run through things like this because we know their property and deal just as well as they do. Have you sought advice from your realtor on this? 

Yeah I agree about changing it out only when it breaks. I'd just hate to spend mo ey on other renovations AND THEN it breaks lol