All Forum Posts by: Eric Samuels

So the first year house hacking my duplex is almost up and to account for the amount of work needed on the property I decided to pause my contributions to my roth IRA and TOD accounts I have with a financial advisor. I think total I was contributing around $600 a month. Right now my property is vacant besides me and am in need of a tenant but I'm working on that. I reeeally want to get back to the point where I'm maxing out my investment vehicles I have with my advisor but also really want to continue contributing to improving this duplex because it's old and still needs a fair amount of work. One year off from contributing to my roth is definitely affecting my compound interest but budget wise once I get a tenant my savings rate will go back up to around $1600. Would it be best to contribute to my roth or should I continue putting money back into my duplex?

So my duplex in Philly is currently vacant (other than me since I’m house hacking) and i’d like to get the other unit rented out as soon as possible. I didn’t know until much after closing on the property that it did not have an official CO and therefore no rental license. I’ve got all of the necessary items for a CO other than architectural plans. Once I get those then L&I will come out to do their own inspection. My reserves are kind of low right now and the best quote I received for architectural plans, which is a requisite for obtaining a CO is for $1800. Would it be a bad move to rent it out first and then pay for architectural plans after?

Appreciate the help.

@Josh Humbert I’m also an over thinker and I ended up jumping into a less than ideal deal. I’m house hacking a duplex and it’s currently not cash flowing (yet) and there were SOO many unexpected issues. It will turn into a great deal once I do all of the forced appreciation I think it needs and am waiting for my appealed property taxes to be accepted. Once those two things happened I should be able to cash flow around 200-300 a month. Pulling from my own experience. If you’re going to pull the trigger on something less than ideal, at least try your best not to make assumptions about anything. Be as curious you naturally are about prior research but in the details of the deal and process of the improvements after you close.

That said, after I pulled the trigger on mine I realized how much more profitable it would have been to either have been more conservative with my numbers or to have waited longer and have found another deal. Waiting isn’t a bad thing and TRUST ME, the anxiety within analysis paralysis is nothing compared to the stress, anxiety, regret and anger of getting into a less than ideal situation and feeling stuck in your first deal.

So I locked in my first house hack last September and it could have been much better. It's an old duplex (1875) in a decent B neighborhood. 1 bed 1 bath in one unit and a 2 bed + flex space (laundry/storage which could upgraded to full br). I got it for $391,500 on an FHA loan 5% down with an $8k credit. Mortgage is $2928. 1br unit can rent for $1200 after fixing a few things and the 2 br should rent for $1800. I appealed my taxes paid upon closing since the assessed value was $500k and it appraised for close to the purchase price. After appeal my monthly mortgage should drop $160/month but I have no idea when that will go through. There have also been a **** ton of expected and unexpected issues with the house so I really need to increase my reserve to further protect myself.

I still want to continue investing but my current funds are nowhere near where they need to be to consider using my own money to get into the second property. Was thinking of wholesaling to earn the capital to get into my second deal but am aware that takes a lot of time on top of the time i’m spending managing/improving the property and my full time job but I really want to put myself in a position to purchase another duplex next year or end of this year. Does anyone have any thoughts on how I should get into the next house hack?

Quote from @Chris Evans:

@Eric Samuels If you're running a renovation business then yes, I'll agree that the ability to keep a pipeline filled is an essential skill. That skill set, however, is required to run any business! If we're talking about being successful in real estate I would say the most essential skill is the ability to plan and act according to the plan. 

I've built a portfolio that could allow me to retire in comfort where all but one purchase was an on-market deal with fair valuations. Knowing what you're trying to build and knowing what's required to get there (planning) and then the ability to act on the plan are the two essential skills that I've seen missing from at least 95% of investors. 

It's easy to get caught up in the deal's numbers but with a plan of action, investors can eliminate waste, pay the business better, and structure a successful operation that can last for generations. 

 Thanks Chris. That is a great reminder. One concern I have with sticking to a specific plan is also knowing when to pivot. I also hear great advice on the other side of things where if something goes wrong, being able to pivot quickly between strategies can be a good trait to have as well. Do you have any thoughts on that?

Through all of my research and networking the most valuable skill in real estate continues to be the ability to find a deal. Whether that’s for wholesaling or for other strategies, everything seems to lead back to finding deals. If you’re good at finding deals then you’re bound to build wealth. Does anyone agree?

I’m in the middle of house hacking my first rental property and I’m thinking about my next move. I continue to hear stories of people driving for dollars and finding great deals. After going to many trials and tribulations with my first deal, I can’t help but think there are deals found by driving for dollars that ended up being bad deals due to unexpected issues with the house. Therefore, I’d love to hear some stories of driving for dollars: how quick did you pull the trigger after discovering the home? Was there anything unexpected that the inspection found, or even worse, didn’t find? How did you pay for it?

Please share!

Quote from @John Mano:

Quote from @Eric Samuels:

Quote from @John Mano:

I can attest that the standard baseboard electric heat is quite expensive to run. I have a tenant that rents a bedroom and the cost to run just one baseboard is about $200 a month.  Instead of complaining about the cold, your tenant will complain about the high electricity bill or the building needs better insulation.  

I'm considering replacing the electric baseboard with the electric hydronic baseboard.  I heard they are more efficient to run but the cost for the unit is higher i.e.  $62 vs $230.  Given the high cost of the hydronic units, I may look into the mini-split option or electric central heat with new duct work. 

Thanks John, unfortunately I opted in offering my tenant a standard rate for utilities each month so I’m going to be eating the cost of whatever decision I make to improve the heat until he moves out (on a 6 month lease). I have a decent furnace but it’s just struggling in 2 rooms. If I buy more time by reducing rent for the winter a bit (let’s say $50/month) $150 would be way less costly than the cost of two baseboard heaters, the cost to set them up and to run them.

Sounds like a lose-lose situation but you're right that the option that cost you the least would be the way to go for now.  What would be your permanent solution once they move out?

I’m still trying to figure that out but ideally I’m hoping that adding a supply vent to the medium sized bedroom and another supply or return vent to the living room would do the trick. I’m going to get a free estimate from a trusted HVAC company. They also recommended using a ductulator (didn’t know that was a thing) to determine if I have the right sized ducts.

Quote from @John Mano:

I can attest that the standard baseboard electric heat is quite expensive to run. I have a tenant that rents a bedroom and the cost to run just one baseboard is about $200 a month.  Instead of complaining about the cold, your tenant will complain about the high electricity bill or the building needs better insulation.  

I'm considering replacing the electric baseboard with the electric hydronic baseboard.  I heard they are more efficient to run but the cost for the unit is higher i.e.  $62 vs $230.  Given the high cost of the hydronic units, I may look into the mini-split option or electric central heat with new duct work. 

Thanks John, unfortunately I opted in offering my tenant a standard rate for utilities each month so I’m going to be eating the cost of whatever decision I make to improve the heat until he moves out (on a 6 month lease). I have a decent furnace but it’s just struggling in 2 rooms. If I buy more time by reducing rent for the winter a bit (let’s say $50/month) $150 would be way less costly than the cost of two baseboard heaters, the cost to set them up and to run them.

Quote from @William Sing:

Congrats Eric on your first House Hack!

Based on how I'm reading this it sounds like this is a multiple-floor home. When it comes to heating and cooling with multiple stories, there is always going to be some degree of difference between each of the floors. I'd recommend just using space heaters for the time being. They usually are more energy efficient than baseboard heaters but are a shorter-term solution. 

The only thing you could potentially do is install a ductless heat pump (mini-split) in the cooler room. These are usually the best way to heat a house uniformly since you can have multiple heads. I have seen a lot of them on the top floor since the main HVAC system doesn't cool down an attic space well. 

I would just build in the cost of the electricity including the space heaters. It is completely up to you though!

 Thanks Will! It's definitely been a rollercoaster so far. I do believe it's a duct issue and not the natural heat differences between floors. It's a 3 story building. Unit 1 is on the first floor and unit 2 is on the 2nd and 3rd. Unit 2 living room on 2nd floor and med bedroom on 3rd floor have the heating issues. If it were a matter of height differences I'd think the master bed on the 3rd would experience the same issue. Also didn't mention a laundry room on the 2nd floor with no return vent (just like medium sized br on 3rd floor) heats up just fine. Feel like there might be some type of obstruction of air flow to the med bedroom and something else at play for the living room. I'm reluctant to do mini splits only because it has what seems to be not too old of a furnace and duct work. Mini splits are really last resort.