All Forum Posts by: Matt Solis

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $290,000
Cash invested: $71,000

HOUSE HACK #2

4B/2BA converted to 6B/3BA

Purchase Price: $290,000
3% Down Payment + Closing Costs: $15,500
Total Renovation Costs: $71,000
Seller Concessions: $15,500
Total Out of Pocket: $71,000

Gross Rents: $4075
PITI, Bills, Reserves: $2800
Cash Flow: $1275

CoC Return: 21%
Total ROI (loan pay down, tax benefits, ARV, appreciation): 100%+

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

High leverage, high cash flow

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

MLS. Needed lots of repairs, so we came in at asking and asked for 15k of concessions, they countered with 5k over asking, but retained concessions.

How did you finance this deal?

3% down conventional

How did you add value to the deal?

Added bathroom, bedrooms, new paint, remove popcorn ceiling, added insulation, new windows, repaired foundation, etc.

What was the outcome?

21% CoC return

Lessons learned? Challenges?

Get bids from contractors while you are under contract. Always get the work in writing. Make a payment schedule. Have lots of reserves.

Zillow’s tax numbers can be way off, I wouldn’t use them. Google the appraisal district of the county the property is located in, and search the property there to find last year’s taxes. Note that any exemptions will not be listed on the county website, so if the taxes seem abnormally low, there’s probably an exemption on it. You can look up the taxes on a few comparables to get a better idea of what the taxes will be.

The sales price is not the assessed value. The assessed value is determined by the county and is used to calculate taxes, land + improvements. It’s usually a good bit less than the actual sales price.

If the deal itself makes sense, it's always a good time to buy, as long as you are planning on keeping the property for several years and don't need to sell in the short term. I do think the BRRR strategy will be more risky with the current economic conditions of rising interest rates and home prices stagnating.

If you are going to pull a HELOC on property A to acquire property B, and plan on refinancing property B to pay back the HELOC on property A, then you need to somehow add value to property B so that you have cash to pay off the HELOC. If you're talking about refinancing property A to pay back the HELOC on the same property, I guess that's possible, but why not just refi to begin with? Closing costs are higher for a refi than a HELOC by the way. And yes, you usually can only go up to 80% LTV for a HELOC or refi.

You seem like you're in a rush. Don't be. You need to focus on educating yourself (read books, watch videos, listen to podcasts, lots of googling, etc). This will be your foundation, don't skip it. Here are some suggestions:

Books: 

The House Hacking Strategy, Craig Curelop

Rich Dad Poor Dad, Robert Kiyosaki
The Book on Rental Property Investing, Brandon Turner

Youtube: 

Stephen Graham (building credit, real estate)

Ask Sebby (building credit)

Charlie Chang

Podcasts:

Bigger Pockets

House Hacking Success

Also, follow people that are doing what you want to do on social media.

Good luck.

Hi! I am also a brand new agent, and this is my current game plan:

- Block out time every day to lead gen. This is the engine that will keep your business running. Be consistent. 

- Consistently post on social media, with an emphasis on education. What are the questions a lot of people ask? Make reels/posts about those topics. Plan ahead.

- Make sure you have a mentor that has done what you want to do!! 

- Host open houses, go to networking events. If you go out for fun, be sure to bring up your profession in conversation. Work your SOI.

- Generally speaking, lead with value. How can you be of service to someone else?

Good luck and have fun!

House hacking a SFH would be the best way to get started IMO. High leverage investment, high potential for cashflow, live for free, great way to get started. I don't know your market, but if you say multifamilies are rare/expensive, you could be waiting for a long time before you get one. I'd look for something with at least 4 bedrooms. Look for properties that you could easily add additional bedrooms (an office or game room that could be a bedroom, an area of the house that could become a bedroom with a couple of walls, etc.).

As far as finding tenants, remember that you can be REALLY picky. Fair housing laws are more relaxed if you’re living in the house, FYI. Use roomies.com or spareroom.com to advertise your rooms. I would recommend having a list of must-haves in a potential roommate and screen out the tenants via messaging first, then graduate to a phone call, THEN a tour of the house, and only then do you send them the application (if you like them). Make sure the application includes a background check, credit check, eviction history, etc.

Feel free to reach out if you want, I have two house hacks and manage 9 tenants currently.

I’m assuming both the husband and wife’s names are on the deed, and my best guess is that she is correct in saying that both would need to sign the lease for it to be valid. Although, it’s very sketchy that a security deposit was delivered before the contract was actually valid. I’d definitely be talking to my broker, but if it were me, I would probably let it go as it’s not worth the headache to get lawyers involved, as long as you get your security deposit back of course.