Background: Just bought my first investment property, a 3Br 2.5Ba (master downstairs) and am taking advantage of the "House Hacking" technique.
Goal: To break into the real estate market by networking, finding good deals, and hard work!
Strategy: I am constantly looking for good deals for Single Family homes that I can rent out (but that's not why I'm starting this discussion).
Idea: So I'm just going map this idea out step by step and let you all have at it!
1) Find good deal on Duplex that can provide cash flow of 10-12% (rent = $600-$700 per residence) net at end of the month and put down 10% down payment ($20,000 on $200,000 property).
2) Research Parcel on Duplex to ensure an extra room/ residence can be built and will comply with local ordinance. Typical issues will be zoning, setbacks, and utility easements (I am civil engineer and work with this stuff everyday; this step is very important). SO BASCIALLY there must be room for a Duplex to become a Triplex!
3) Spend $25,000 building extra residence that can also be rented out between $600-$700.
4) Have bank appraise rehab property and refinance to get back your $20,000 down payment (or more).
5) Buy and Hold: Earn Cash flow from net, equity, & Appreciation.
Mortgage and Expenses = $1500.00/mo
Rent= $600*3=$1800.00/mo ---------$300/$1500 = .2*.5 (50% rule) = 10% return
Equity= starts at $288/mo @ 4%
Let me know what you guys think!
