All Forum Posts by: Nicholas Wilson

@Nathan Langdon

First, congrats on your first investment property! I just recently closed on my first house hack as well and had he EXACT same situation occurred where I inherited tenants and the rents were below market value.

I personally decided on raising the rent but not at full value. I concluded that there’s more value in peace of mind and consistent income than the money upfront! I’m confident overtime I’ll get that money back and then some! I believe in a “double bottom line” in business: it’s about profit AND people. So, do right by your business and also do right by your tenant.

The fact that you are switching from month to month to a year lease is actually a great way to position it to your tenant. As I said to my tenant, “Though I am raising the rent, this rate is locked in, won’t go up for the next two years and ensures you this apartment over the term of the lease” (I extended it from a year lease to a two year lease). He was completely on board and appreciated the security of predictability more than anything else!

I just recently closed on my first house hack in West Philadelphia. It is a triplex with 2 tenants already in place. 

PITI (with PMI) is about $1100.

Rents are currently at $1270.

With that in place, my wife and I are able to accomplish a few powerful things:

1. Lower our expenses by not having to factor in a mortgage.

2. Improve our credit score by owning a home.

3. Improve our debt to income ratio by acquiring more income than debt.

4. Having something in our portfolio to have more credibility with lenders.

5. Add value to the homes so that we can create more cash flow.

Now that we have officially competed the first month of the year, I want to know what goals we all have set for 2019 and what progress we’ve made to achieve those goals so far?!

@Madhu Kumar I found this property on Redfin.com. I have my criteria in a saved search so only multifamily properties with at least 3 bathrooms comes up. From there I just run the numbers on every property that comes up. 

My PITI is around $1000/month and the rental income for the other two units is $1275. It's not the largest spread but I was okay with it because my objective was clear: live mortgage free in a multi-family property in 19131. The $275 will go towards utilities. That's good enough for me. Plus, as we improve the units the rents can increase. Once we move on to our next property, we'll be getting an additional $700 from the unit we were occupying.

Because your debt to income ratio is so low, I would definitely invest first! My recommendation is to partner with an experienced flipper and come into the deal with the financing! That way you can earn enough capital from the flips to cover your loans AND you get a few deals and experience under your belt in the process!

Best of luck!

@Max T. That’s awesome!! I teach at KIPP DuBois Collegiate Academy on Parkside Avenue. I teach Junior Seminar (it’s basically college and career readiness)! How about you?

I wrote out where I wanted to be in the next 4 years and backwards engineered the steps I’d have to take to get there. I have clear goals for this year and each week I review them and determine what I have to do this week to get the job done! I’ve never been more focused!

Oh, I would also say working out consistently has really helped with my discipline, confidence and focus!

@Dennis M. Love it!

@Bill F. wow, you hit the nail right on the head! I 100% identify with what you shared!

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Philadelphia.

Triplex: Cash flowing house hack in an up-and-coming neighborhood.

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

I wanted to house hack to keep my expenses low. I also teach in the neighborhood that the triplex is in.

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

Since I was using FHA I did not want to acquire a property AS-IS, so I stalked the MLS until I found one that showed the numbers I was looking for.

How did you finance this deal?

FHA.

How did you add value to the deal?

I got approved through one lender, then shopped around to 4 other lenders to find better terms. In the end, my interest rate was .4% lower and I saved $10,000 in fees and closing costs.

The rents are currently below market value. My plan is to do renovations in the unit my wife and I are living in and then move to the second floor when the lease is up. That way we can raise the rent in our unit and begin work on the next one to raise the value there as well.