How I made 144K in 21 Months House Hacking

115 Replies

With only $1500 in my bank account, I made a decision to move to Las Vegas from my small town in Connecticut in July 2016. At this time, I knew the potential of investing in real estate but was unsure of exactly how to begin or what to purchase. After a month of searching and not being completely ready to buy, I decided to move into a 6-bed house where I rented a room for $400/month.

After living in the house for a couple of months, I couldn't help but calculate how much my landlord was making every month charging everyone $400-600 per month. I was disappointed that most of the multifamilies I saw on Zillow and Redfin were in rougher neighborhoods, so I knew I had to replicate this bedroom rental model. 

Over the following 9 months, I was able to save about $10k from my W-2 job which allowed me to get pre-approved for $180k. Wanting to optimize my house hack, I had Zillow, Realtor.com, MLS, and Craigslist auto searches for 4+ bedroom houses under 225k. After 9 rejections....the 10th offer was the magic one. I found it on Zillow after a price drop from $189,900 to $185,000 for a 7 Bed/5 Bath, 2426 sqft. house. I offered 170k, and they countered at 175k with 5k in closing costs to the buyer. The deal was done. It appraised for 186k during closing.

I purchased this property with a conventional loan with about 10k down (my entire savings) at 4.35% interest rate. My monthly PITI was $996/month.

Even though the house passed for conventional financing, it was barely liveable, extremely outdated, and needed to be brought back to life. With the property being located on Eastern Ave near the Las Vegas Airport, the zoning laws allow for residential or commercial use.

Now I don't recommend any of this but I was essentially relying on my W-2 income of $1200/week to cover the labor costs for the contractors and putting materials on my credit card. I ripped up the old laminate floors, a layer of carpet under that throughout the house, and linoleum flooring under that as well. I put down luxury vinyl planking throughout the house and 4-inch base, except for the kitchen and the converted garage that already had tile. I remodeled 3 of the 5 bathrooms but waited to do the master bathroom until I had enough money (where I was living). I also had the kitchen remodeled by one of my contractor referrals 8-9 months in, replaced the AC after a year and reshingled the roof 2 months before selling. All in rehab costs for the house were $31k.

Now to the good stuff.....6 bedrooms were rented for the following ($650 garage, $450 small bedroom, $600 large bedroom, $500 bedroom w/private bath, $525 large bedroom, $450 small bedroom)

Note: All prices include $50 fixed cost for utilities. Subtract my monthly expenses + mortgage = $1750/month cash flow. Factoring in vacancies, the total generated cash flow was $35,450 over the course of those 21 months (I also moved out of the master for 4 months, renting the room out for $500).

As of March 1st, 2019 I have signed a Lease Purchase Agreement with another local house hacker looking to do the same thing for $300,000 purchase price (60k down, the remaining 80k at time of refinancing). So that leaves me $140k in equity at the time of purchase, $35,450 rental cash flow, less the $31k in renovations = $144,450 Profit. And it does get better.

Since that house was my primary residence and will be recorded after 2 years of ownership, that 144k will not get hit with capital gains. Since I am carrying the note until the new owner is able to refinance, I am receiving an additional $500 per month in surplus cash flow. At the expected time of refinancing, my total profit for the property will surpass $150,000.

I see this house hack as a monumental start to my Real Estate career. 

Because all of my living expenses were covered, I was able to quit my job and focus on real estate full-time. Even if times were rough, the income from the property allowed me to focus on wholesaling and get into some fix and flips.


I am no expert but I think if you are scared....just DO it. Take action. You will make progress towards your goals.

I will be using these funds to expand my rental portfolio in Columbus, Ohio and some of the funds have already helped me get 3 more duplexes under contract to purchase. This post was made to inspire and I hope it helps someone else get started on their journey.

-GC3

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First, Thanks for Sharing.

I've never participated in any type of forum type of posting in my life (excluding social media) however, I was compelled to reply to this. I am in the middle of reading the bigger pockets how to invest in real estate beginners guide to getting started book right now. I have been listening to the podcast for about 6 months now. I finally decided to check out this website and look into the forums and this was the first one I clicked on. 

I also live in Las Vegas, so opening this as my first forum post is an omen. An omen for me to finally stop thinking and start doing. Taking action. This being my first post! I have nothing else really to contribute at the moment, I just wanted to say thank you. It's inspiring to hear that happening in my marketplace. I had the same realization about searching for multifamilies in this city as many of them are in the nellis area and rougher parts of town. It's super cool how you figured a way around that! Thanks Again!

Thank you for your reply. Let’s get together for coffee this week if you have some time. Would love to help you if I can. Send me a private message. 

Originally posted by @Quincy Palou :

First, Thanks for Sharing.

I've never participated in any type of forum type of posting in my life (excluding social media) however, I was compelled to reply to this. I am in the middle of reading the bigger pockets how to invest in real estate beginners guide to getting started book right now. I have been listening to the podcast for about 6 months now. I finally decided to check out this website and look into the forums and this was the first one I clicked on. 

I also live in Las Vegas, so opening this as my first forum post is an omen. An omen for me to finally stop thinking and start doing. Taking action. This being my first post! I have nothing else really to contribute at the moment, I just wanted to say thank you. It's inspiring to hear that happening in my marketplace. I had the same realization about searching for multifamilies in this city as many of them are in the nellis area and rougher parts of town. It's super cool how you figured a way around that! Thanks Again!

Great job and congrats to a successful start @Gary Crawford !! i also invest in Las Vegas, currently putting together a creative financing / business takeover / househack / brrrrr - behemoth project (for my experience) after dwelling in flips and rental property investing in LV - lets see how that works out haha! what's your next project? 

let's get a coffe sometime! 

This post has been removed.

Thanks Stephan. I am always in for coffee! The next project is to acquire 100 Doors in Columbus OH. 

Originally posted by @Stephan Kraus :

Great job and congrats to a successful start @Gary Crawford!! i also invest in Las Vegas, currently putting together a creative financing / business takeover / househack / brrrrr - behemoth project (for my experience) after dwelling in flips and rental property investing in LV - lets see how that works out haha! what's your next project? 

let's get a coffe sometime! 

@Gary Crawford  Thank you for sharing this incredible start of a career! We are looking to house hack and rent by the room as well but in the north east and in much smaller scale.

I have a couple of questions:

-Are there any restrictions on how many unrelated people can live in the same house? 

-Did you remodel and then rent (have a "holding cost" per say)? 

-Or did you remodel as you rented the place? If so, did your rent change to reflect the nicer place?

-How has managing tenants that live with been?  

Warm wishes,

Ana 

Thanks Jon! Just let me know when...
Originally posted by @Jon Lee :

Well done @Gary Crawford!  Will need you to share your experience with the Outback soon.  We're rooting for your success in building your portfolio!

Thank you! Which state and city? All great questions. To start, yes technically the restriction is 5, however I didn't run into any issues.  I was thankful to have 2 of the roommates from my previous rental move in with me from the start and were okay with the rehab going on.  I had 4 roommates comfortable living in the house while construction was going on, I just made sure to get the demo and floors down right after away. Managing the tenants was the biggest struggle. I hired a house cleaner once a month to clean the common areas and bathroom, but the kitchen constantly needed cleaning with 7 people living in the house...I would probably max this out at 5 bedrooms in the future with a single family home. Rents stayed the same and no one ever actually challenged the pricing.  The new owner has since furnished all of the rooms to increase rents which is the way to go I think. Here is a link to his article to check out: https://www.biggerpockets.com/forums/223/topics/67...
Hope this answers most of your questions!

Originally posted by @Ana Coello :

@Gary Crawford Thank you for sharing this incredible start of a career! We are looking to house hack and rent by the room as well but in the north east and in much smaller scale.

I have a couple of questions:

-Are there any restrictions on how many unrelated people can live in the same house? 

-Did you remodel and then rent (have a "holding cost" per say)? 

-Or did you remodel as you rented the place? If so, did your rent change to reflect the nicer place?

-How has managing tenants that live with been?  

Warm wishes,

Ana 

Awesome! I've wanted to do househacking but have been stuborn with wanting to do it in a multi family but this model makes so much more sense in our local market. Appreciate the insight and i will look to implement this househack model here in Vegas as well! 

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