Hi all,

I’m an aspiring RE investor looking to make my first deal leveraging the house hack approach. However, before I embark upon this journey, I was hoping to get some feedback from the BP family on my potential first deal.

Current Situation:

My fiance and I purchased our first home together in December of 2016 in Portland, OR. Fast forward to about 4 months ago, we decided to refinance since rates were at 5+ year lows. We only put 5% down when we purchased the house so we we're hoping to ride the appreciation train out of our PMI with this effort as well. This was obviously a bit of a gamble because the house had to appraise above a certain figure in effort to remove the PMI but we chose to do it anyway because the rate reduction in and of itself was worth the cost/effort of the refi. However, to our pleasant surprise, the house appraised well above what we were expecting (roughly $55k above Redfin/Zillow estimates). No more PMI, great!

Even better though, I now all of a sudden have $150k in equity in this thing and my entrepreneurial mind starts spinning out of control. I work full-time but also own a couple small businesses generating some additional cash flow on the side. My immediate thought is sell the house and reinvest the $150k(ish) into what I’ve always wanted to do – real estate investing.

Next Steps:

Reading through countless BP articles and being a religious follower of the BP RE podcast, I knew that I needed to develop some strategy before just taking the plunge into RE investing. That being said, the last 4 months (since the refi) I’ve been looking and analyzing house hack deals. I’ve set my mind and business approach to house hacking as my niche – specifically living in one unit and renting out the other(s). I’d like to start out in Portland to get my feet wet and then potentially expand to other markets after I get some experience under my belt. Now I know Portland is definitely not the best market get started in with RE investing right now but according to my numbers, I would be in a better situation than I am now. But that’s what I would really like your help with.

What I'd like to do is purchase a duplex, renovate it, and cash out/refi with a BRRRR(ish) approach. I know I'm not going to get all my capital back but I think I can get enough out to fund my next deal.

So… without further ado…

The property I’m looking at is a 4 bedroom 2 bath duplex (2/1 on each side) listed for around $500k. My goal would be to put a 3.5% down payment and then use the remainder of my funds from the sale of my current house to fund my renovation budget in which I would convert the 2/1 into a 3/2 on each side. According to my research, 3/2s in the area rent from somewhere between 2200-2600. The mortgage on the $500k list price would be somewhere around $3400 (assuming a 30 year fixed rate @ ~4%).

If you look at my chart below, you’ll see that according to my calculations I should be saving around $1,400/month relative to my current situation. I obviously did not add a line item for vacancy costs that's something that I will need to account for as well but according to my buddy who is a General Contractor, the renovation that I’m going for should be feasible with my budget and a 12 week timeline.

My thought is to then refi after a while (likely 1-2 years) and pull out somewhere between $30-$50k and then use that do fund my next deal plus the nearly $1,400/month that I’m saving from my current situation.

Now obviously this is all hypothetical because I haven’t listed my house yet but that’s the least of my worries. I have no concerns about it selling. It was new construction in 2016 and is in a highly desirable area in Portland.

So… please, let me hear it. Good or bad. Again, this makes sense to me even in this hot Portland market but let me know what you all think! Any input is greatly appreciated. 

Thanks!