Investment Info:
Small multi-family (2-4 units) buy & hold investment.
Purchase price: $1,380,000
Cash invested: $231,500
Bay Area 4plex househack in Oakland. All 1bed/1ba units + 4 car garage with steady and market rate tenants. 1 vacant unit for me.
What made you interested in investing in this type of deal?
Cashflow in a househack in the Bay is tough, but I'm really excited to drop my expenses by $2,800/mo. I'll be able to cashflow once I move onto the next deal in a couple months.
My monthly rent expense went from $4,000/mo down to $1,200/mo + building equity.
How did you find this deal and how did you negotiate it?
I was in the hunt for a househack for close to a year, but competition during the pandemic was insane. As a licensed agent, I proactively reached out to listings coming soon on the MLS and was able to get the listing agent's attention. I negotiated directly with the listing agent and was able to leverage the contingencies to get seller credit.
How did you finance this deal?
Conventional primary residence 20% down. It's near impossible to do a low down 3-4 unit in the Bay area because of the self-sufficiency test (If you plan on using an FHA, ask your realtor if you can do an FHA for 3-4 unit; this will easily separate out experienced realtors from others).
How did you add value to the deal?
The vacant unit needed some cosmetic fixes. I repainted all the rooms from yellow (yuck) to coffee white with an olive green accent wall. Now the light bounces off the bedroom and brightens the entire unit. The kitchen and bathroom floors were old vinyl and tile, so I replaced it with LVP and the outcome is amazing. I also reglazed the old rusty tub and yellow tile. Spent about $3k, but I expect rent to increase about $150/mo, which is a solid 60% ROI and enjoyable living experience.
Lessons learned? Challenges?
Where do I begin... I had worked with another agent that had no experience with multifamily or ADUs. After 15 failed offers, I ended up getting my own license and closing on my own home. Highly suggest working with a specialized agent instead of trying to align your goals with an agent's expertise.
Don't give up! I was literally going to 10 open houses every sunday, getting beat out by insane offers every week. Lean in on your agent to recon properties so that you don't burn yourself out.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
ME :) I'm part of the David Greene Team helping others househack in the Bay Area.
