Is a short sale a bad first house hack?

Question

Hi BP community, I have been looking for my first house hack deal in an expensive market. I finally located a property where the economics look great and it is closer to my job. It's a shorter commute and I could even not renew my car lease in December to eliminate expenses. The seller has listed that this is a short sale, which I had to google what short sale meant. I was hoping to get some advice from the BP community on what to be on the look out for / questions to ask regarding the short sale. I have the determination to make this happen but is there a point where it just becomes ridiculous? I am going to see the property tomorrow afternoon. Below are the economics of the deal.

Wayne Brooks · Answer

Short sales are no better or worse than other sale, except they will take time.  Make sure and use an experienced short sale agent.  The biggest obstacles are the bank agreeing to the price and whoever is negotiating it not knowing about junior liens than can cause a problem.

Ned Carey · Answer

@Adam Lacey Yes if the liens were less than $200k then it wouldn't be a short sale.

A short sale is a fine way to get a House hack. As Wayne said, it may take a long time and there is no guarantee that the bank will agree after waiting.

Adam L. · Answer

I went out to view the property and it has potential to be a good deal but I have the following hurdles. Would appreciate any advice!

1) The property has two units: 5 and 6. 5 was evicted in early March. I was able to tour this unit and I think it has nice renovation potential. Unit 6 we were not able to tour. According to the realtor (found her on zillow) the landlord did not want us to go inside because the tenant is in jail and the tenant's girlfriend is presently living in there. Unit 6 has not been paying rent. The realtor told me that she is basically a squatter. The realtor was encouraging me to make an offer and perform an inspection on the exterior and only unit 5, then I could evict unit 6 after acquiring the property and perform an inspection on unit 6. This sounded extremely risky and I don't think I would pass to be able to get a mortgage without a full inspection. Not to mention the eviction ban, right? I thought about approaching Unit 6 and offering to pay them some money so an inspector can come inside. Does this seem like a potential solution, or do you recommend another approach?

If I was able to have the entire duplex inspected and my offer was accepted could I do the renovations on unit 5 and the exterior, then evict unit 6 after the eviction ban expires? Does this seem like a feasible approach?

2) The duplex is attached to a single family house (SFH) in the rear. I confirmed with the realtor that these two properties 'share' a roof. While touring the property I noticed that there is a tarp over the roof that is covering both the duplex and the SFH. I did some digging on who owns that property and it appear that they entered into a contract in June with a roofing company to fix their roof. The realtor asked the duplex owner and replied that "there are no issues with the duplex roof." Should I try to reach out to the owner of the SFH to see what the roofing issues are, and maybe coordinate with them? I was also thinking of having the property inspected before making an offer to see if there are any roofing issues with the duplex, but I worry about the fact that it is a shared roof.

Adam L. · Answer

This deal works at the asking price of $200,000. Is it possible there are liens for more than $200,000?