All Forum Posts by: Joseph Ayoub

That's awesome, congrats on your first place! Love that you're renting the castia for extra cash, good stuff. 

@Manda Gouvion as others have stated, keeping an accurate record of your income/expenses are a great way to stay on track with your finances. I would personally recommend putting all expenses on a single credit card, only accepting check/Venmo/electronic deposits for payment, and using an app like Quickbooks to keep track of and categorize receipts. Also, using a knowledgeable accountant is worth the money. Find a good one by calling people in your area or checking out their websites, making sure they work with people who own real estate/investments. Those are the best kind of accountants who can help you save the most money.

As far as getting started $40k can definitely be enough, just depends on your market. If you are not living in the property and it is strictly an investment, many lenders will require you to put 10% - 20% down (so you'd be looking at properties in the $200k - $400k range). If you live in the property and rent it out, you can put as little as 3% down. So like others have said, house hacking could be a great bet, especially if there are duplexes or triplexes in your area. A strategy could be to find a nice duplex for low money down, renovate one half of it to make it boujee while you live in the other half, then move to the nice unit and rent out the other. 

@Frances Marquez Baltimore definitely has some great opportunities for multifamily properties. At one point I was working with my realtor to find my first househack there, but ended up buying a place in DC and renting by the room. If you're new to Baltimore, the housing typology map put together by the Baltimore City Planning Department can be a great guide to find an area to invest in based on your comfort level/goals. A few neighborhoods that are walkable to the MARC train that goes to Union Station/metro in DC are:

• Mount Vernon and Station North (Penn Station)
• Ridley's Delight, Sharp Leadenhall, Otterbein (Camden Station)

This isn't an exhaustive list, but I've seen some multi family homes over the past 12 months in the bolded neighborhoods. 

@James G. Yup, exactly that. I have the house partially furnished with the living and dining rooms having full sets and the kitchen having some pots, pans, and silverware (with room for the new roommates to bring their own). 

In my experience, it has been a good selling point since many young professionals are relatively transient and bring personal belongings/kitchenware with them, but will often not have full living room or dining room furniture. This allows for flexible leases and for renters who are new to the area to immediately feel at home without needing to bring too much. Some cons though are that this may not be attractive to more established renters that own many items they want to bring. Happy to discuss more if you want to PM me. 

I'm currently househacking a SFH in NE DC and was in a similar spot to you when I was getting my first property since I looked in the NOVA area. Here's my take:

Renting by the room will almost always be more profitable. I'm currently renting rooms in a 4BR house for $850-$950/month while renting a whole house in the neighborhood would rent from $2500-$3000 or so. In my opinion, the demand will always be there since it's appealing for many young professionals to pay $950 to rent a large room in a group house instead of pay $1500+ for studio or 1BR in an apartment building. That being said, if you go this route, it requires a bit more work since you'll essentially have to market each room. I'd recommend: 

• Do as much screening as possible before you rent rooms - not only a credit check, but also ask about certain lifestyle choices (partying, smoking, pets, having significant others over, etc.) You'll want to make sure that the roommates are compatible.
• Put systems in place to make roommate living easier. You'll want to assume that all rooms will be rented to individuals who might not know each other. Do things like get a monthly house cleaner and consider getting communal supplies (toilet paper, soap, etc.) delivered to the house monthly. Essentially, try and remove any friction that could occur between roommates.

The property criteria for renting to young professionals might be a litter different than renting to a family. Finding a home in a desirable location (close to public transport, walkable or a short drive to grocery/shopping, etc.) is key. You'll also want things like off street parking or something to make your house marketable. Turnover is definitely higher, I've had roommates stay as short as 6 months or as long as two years. If you're renting to a family, the school district the house is in is the major key as opposed to other factors. However, there's definitely lower turnover and you may have less hands on management. 

Investment Info:

Single-family residence buy & hold investment in Washington.

Purchase price: $434,000
Cash invested: $38,000

My first deal was house hacking a 3BR 2.5 SFH in northeast DC that I turned into a 4BR 3BA home. The house was renovated which made it appealing for roommates and was walkable to the metro. This house had a large bonus room which I use as a bedroom and a half bath on the first floor, and after living there one year, I renovated the half bath to a full to add more value. I just refinanced and will cashflow $800/month on the deal when all rooms are rented.

What made you interested in investing in this type of deal?

I was interested in this deal because it was recently renovated, had off-street parking, and was walking distance to the metro, all of which make the house more marketable and attract great roommates quickly. Also, the house had a bonus room and half bath on the first floor which I saw the opportunity to turn into a second master's suite.

How did you find this deal and how did you negotiate it?

I found this deal on the MLS by working with a realtor.

How did you finance this deal?

I used a conventional loan and put 3% down. I paid for the bathroom expansion with cash after living there one year ($10k renovation)

How did you add value to the deal?

I used the large bonus room as a bedroom and converted the half bath on the first floor to a full to make for an optimal roommate situation. I also added systems in place to automatically order commonly used supplies (like toilet paper and paper towels) and have a cleaning service included with rent to make it more appealing for single room renting.

What was the outcome?

My first year, I bought the house for $434K, the monthly expenses were $2745/month, and I brought in $2675/month in rent, leaving only $70 I paid out of pocket to live there. After expanding the half bath to a full after the first year and refinancing in October 2020, the monthly expenses are down to $2090 and the house appraised for $530K. When I move out and rent out all four bedrooms, I will cashflow around $800.

Lessons learned? Challenges?

House hacking is possible in a HCOL city when you do not have much money! Do your research on neighborhoods and streets and determine how much risk you are willing to tolerate with location. When looking for a deal, try to find unfinished space, bonus rooms, or half baths to add value. Being walkable to the metro, having a home in great condition, off street parking, and a great rental ad make a huge difference. Put systems in place (like a house cleaner) to make living with roommates easy.