All Forum Posts by: Sarah D.

I'll throw in my vote for Cozy as well.  Very easy to use for tenants and you get rent directly deposited into your account each month.  I believe tenants can even set it up to just auto draft on the first of the month, which lots of people like so they don't have to worry about remembering to pay their bills directly.

We only have 4 units so far, so my experience is limited.

@Ali Boone  My apologies, my post wasn't clear.  We just purchased the 4 unit six months ago (fall 2016), so it is possible even with today's prices.  The property needed work to bring the rent up to support the purchase price, and we saved ~$40K in rehab cost by doing the bulk of the work ourselves.  The house we sold to buy the 4 unit was purchased in 2009.  A couple of things outside our control were in our favor:

- the sellers were difficult to work with and slow to respond.  I imagine this turned off potential buyers.  

- The property was expensive for a first time house hacker/investor, and the profits are probably too small for a MFU flipper. I think we had limited competition.

Everyone says the first purchase is the hardest, but I think the second might be more difficult.  We may not house hack depending on the property location (we have a kid about to start kindergarten).  I'm still confident in our ability to purchase again this year, find something that cashflows enough for our goals, and allows us to add value to increase our net worth as well as our monthly income.

@Jennifer Rysdam you know it's the right decision because you don't want to do it ;)  Much like getting up to work out instead of hitting the snooze 3 more times.

We bought a 4 unit and gave the two occupied units 60 days so we could rehab.  One was a family with two young girls, paying ~25% below market.  We have two young girls, so you can imagine how that felt!

Good for you for doing the tough things!  Keep us posted on the rehab! 

@Ali Boone Depends on how you define 'work.' We funded the 20% down for this property by selling the house we bought in 2009; made $100K+ on it because we bought at the downturn and did some work to the place. The three units completely pay PITI, so we are now living for free just by using the equity in a house we had to pay for.  

We did put an additional $60K of our money into this place, but that increased our equity in the place at least $175K.  The next step is to pull the $60K back out to help fund the next purchase, making that $60K more of a loan to ourselves than an expense.  

Once fully rented this place will cashflow $1K/mo; that accounts for capex, vacancy, and maintenance. That gives us a 5% COC return, 10% COC if you include mortgage paydown in the numbers. So not great by your standards, but this purchase accomplished the following for us:

1. Significantly reduced our living expenses.

2. Got us into RE investing in an expensive and competitive market, both rehabbing and landlording.

3. Increased our networth by >$100k.

So, for our goals, yes this works.  For your goals and the goals of most experienced investors, this might seem crazy.  

@Ali Boone Thanks for starting this!  I invest with my husband.  We're house hacking a 4 unit property in San Diego, and will be looking to purchase another small multifamily at the end of this year.  We'd also like to get into small commercial property and small residential redevelopment.  My goal is to quit my W2 in 3-5 years and focus entirely on RE.

@Max May  I'd definitely consider house hacking as a first strategy, though I'm biased because we are doing that in SD right now.  I think the risk is lower than other strategies because of loan options and the significant reduction in your living costs.  It is very competitive, but I've never seen a time in SD that wasn't (though I only go back to 2009).  This is a fabulous place to live, and there are lots of people willing to pay for the privilege.  

Two pieces of advice: Don't jump into a 'bad' deal and don't let other's define what a good or bad deal is for you. Figure out your goals with this first purchase and stick to them.  Other people's property metrics won't necessarily apply.

@Joe Prillaman I'd like to add a vote to the house hack strategy.  I feel it's low risk for a lot of reasons (lower cost of entry, great first hand learning, multiple exit strategies, reduces your cost of living for faster savings for the next deal, etc).  Also take this time to network and stockpile cash.

Finally, if you've done proper analysis on a deal and feel confident, don't worry about making the wrong move.  Nothing you do will be perfect, and there will always be ways to have done anything better.  Learn to analyze risk, plan to mitigate that risk, and keep moving forward.  

On a personal note, I always say if I go could back in time I'd see all the concerts that I can't anymore. So make sure you're also enjoying the things that add value to your life, which are ultimately the reason for REI/financial independence.

@April Ryan  Looks fabulous!  You have some amazing dedication to doing a job right.  

I've had Kimball, Tirey & St. John LLP recommended to me by several real estate professionals. Thankfully, I haven't had to use them (yet...)

@Ben Valentin You're doubling the square footage; wouldn't that mean essentially gutting the house and rebuilding it?  Otherwise the layout would make little sense (1000 sq ft is more than a new bed and bath, I assume LR/kitchen/DR are being increased as well).  Also, will the city inspector want all electrical and plumbing to be up to code, thus requiring all walls to be opened up?   Is $115K really an accurate cost?  How long are you projecting to hold this?