House Hacking Research - Tell Me Your Story!
Craig CurelopBusiness Member
Real Estate Agent · Post Falls, ID · Member since 2016 · 1k+ posts · 1k+ votesHouse Hacking Research - Tell Me Your Story!
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Rental Property Investor · Levittown, PA · Member since 2016 · 109 posts · 97 votes
7yMy first house hack was done accidentally.
I was required to move from PA to NJ for a new job right out of college. After looking a places to rent, I quickly realized that renting a 2 bedroom apartment would be more expensive then a mortgage on a 4 bedroom house in the same area!
My first property was in Edgewater Park NJ, technically South Jersey. Its a large 2300 SF twin house. Bought for $30k cash (borrowed money from family), put about $20k into it (got a high interest personal loan)- all in for $50k... apprasied for $140k and I pulled out $115k.
After paying back the $30k I borrowed and the $20k private loan, I had $65,000 for another deal.
With the money I received my the cash refi, I was able to purchase the attached twin house that came up for sale. Bought with the $65,000, and also put $20k into this one. $85k all in. appraised for $150k, and did a refi for $115,000 again leaving some more $ back in my pocket.
I lived in the first house while fixing it up, and it was super convenient to fix up my first rental after my 9-5 job (since all I had to do was walk next door).
After completing the rental, I advertised, screened, and found great tenants for the property.
After paying off the mortgage, I was able to cash flow over $500/month.
Since I saw such great returns, I decided to move out and rent the side that I was living in as well.
Both properties currently bring me in over $1,100 a month in passive cash flow.
72 Replies
- Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes7y
I saw an investor listing duplexes at value but ultimately selling pretty far under. I jumped at something left in the portfolio with a low offer and it was accepted.
Purchase price 160k rents for 900/side.
I did this when cash reserves weren’t where I’d like them to be so I just got a home warranty.
Biggest things I learned is..
1) Don’t tell your tenant you own it. Tell them you manage it so you can give hardline late fees etc without looking heartless when they give you a great reason they can’t pay on time for 3 months in a row.
2) Scope your lines. Home warranties often don’t cover the main line collapsing and that’s a bigger repair.
Still working on my househack, don't have good details for you, Craig.
- Investor · Washington, DC · Member since 2017 · 198 posts · 323 votes7y
My house hacking plan was to buy a house with a separate basement unit and rent out all the rooms upstairs. In October of 2017 I purchased a huge four level row house in Washington DC for $800,000. The basement unit has its own separate front and back entrances, its own kitchen, its own washer and dryer, etc. The only modifications I had to make to the house was to install a washer and dryer in the back porch off the upstairs kitchen so the housemates upstairs had access to their own laundry and I hung a door between the upstairs kitchen and dining room, thus turning the dining room into another room for rent.
I rented out all the upstairs bedrooms within a month of owning the property. A year and a half later three of the original housemates are still living upstairs and the only vacancy I have had was in one bedroom for two weeks around Christmas time last year. Usually if someone is moving out, they move out the last day of the month and the new tenant moves in the next day.
The combined rents of all the upstairs bedrooms is $5461. My PITI is $3590. So I get paid $1871 a month to live in a high cost of living area. Each month I divide up the utilities between the number of housemates so that keeps expenses like water, electric, internet, etc. low, typically $75 per person on average.
As an added bonus, if you believe in Zestimates, then I have gained $200,000 in appreciation since owning the property as Zillow estimates the house to be worth $1 million today.
- Real Estate Agent · Harrisburg, PA · Member since 2016 · 159 posts · 82 votes7y
I bought a triplex 2 years ago with my then girlfriend now wife for $70,000. We used traditional financing and put 20% down. It needed a lot of work, but at this point it's mostly stabilized. We live in the biggest unit (1st floor) and we rent out the basement and 2nd floor units. The rents cover the mortgage and utilities and some months we even have a little cash flow!
The only real downside is that the property is in Harrisburg PA, in a rough neighborhood. But for now we're satisfied with the experience and the savings.
I'd enjoy answering this question and including a scan of a purchase closing statement, a mortgage payoff letter/warranty deed returned from a county Recorder's office, and even a 2nd closing statement from the sale of the same property, all spanning 20 or so years. I have a couple instances to choose from as I was "house hacking" back before it was a phrase.
I'd appreciate it if someone would let me know if posting those documents is against forum rules. I read somewhere that I need to cover up company and individual's names as I don't plan to go to the trouble of getting permission from all those parties. Otherwise I think it's okay.
It may take me a couple of weeks to pull up a set of documents, whichever set is easiest for me to find.
- 7yNick GiulioniPro MemberRental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
Purchased a single family home w/ MIL suite for $640k in October 2016 w/ 20% down. Sectioned off house with two separate entrances and had a mortgage of $3100 and tenants paying $1750.
Through improving the house, recently got it appraised for $810k. Using HELOC to purchase other properties.
Subsidized my living in SO Cal greatly!
- Rental Property Investor · Philadelphia, PA · Member since 2014 · 17 posts · 8 votes7y
I just recently closed on my first house hack in West Philadelphia. It is a triplex with 2 tenants already in place.
PITI (with PMI) is about $1100.
Rents are currently at $1270.
With that in place, my wife and I are able to accomplish a few powerful things:
1. Lower our expenses by not having to factor in a mortgage.
2. Improve our credit score by owning a home.
3. Improve our debt to income ratio by acquiring more income than debt.
4. Having something in our portfolio to have more credibility with lenders.
5. Add value to the homes so that we can create more cash flow.
- Real Estate Investor · Pasco, WA · Member since 2015 · 16 posts · 8 votes7y
I am currently on my first house hack. I bought a house at 148k, almost all financed with a secondary loan of 5k to make it 143k financed, with the secondary loan being no interest, balloon at the end.
I came at looking for houses with the intention of renting out the spare bedrooms and having it ultimately pay for itself. (I eventually got the numbers but did not account for capx and other savings. woops!) The house itself was a 3 bedroom with one "den". Luckily, the den was fully furnished as a bedroom, it just wasn't advertised as such. Sweet. I decided to bunk there and set up the other rooms to rent. Luckily, the house itself was in good repair so I did not need much in terms of renovation.
My mortgage payments come out at 1062. So I knew I could make it work to where at least I would be at normal rent or cheaper. I brought a friend in with the knowledge that we would put him under contract and that the whole thing would be contractually based. No hurt feelings, we are both financially minded, and he would still be saving quite a bit.
I then used the book on managing rental properties to help screen tenants. With effort I got really good tenants. They were properly screened and fantastic, all luckily around the same age so its a cool family atmosphere.
My first mistake was having utils be split by tenants. I would suggest projecting utilities and adding that into rent so it can be very clean during tax time. Had I done split utilities for a year the numbers would have just been a headache. Instead, I increased rent for everyone by 75, which everyone was cool with because of my rapport and explanation to them. Not I bring in 1475, mortgage and utils average about 1375, so I get that extra 100. I have completely saved any extra money and have been able to build my emergency funds and extra cash on the side. Sweet.
- CA · Member since 2018 · 83 posts · 44 votes7y
I found a mixed property in Oakland, CA. Even with rent control it cashflowed positively after expenses. I figured I could stay in one of the studios with an FHA loan. Asking price was $1,050,000.
Alas, FHA doesn't do 5 units and I didn't have the $200k for a conventional loan. No seller financing available, either.
I found another triplex near me for $900,000 that had been upgraded. The rent for each 1 bedroom would be $2200 and even that was aggressive. I thought about turning the garage into a living space but it got bought up while I was trying to figure it out. - Rental Property Investor · San Diego, CA · Member since 2018 · 72 posts · 37 votes7y
@Craig Curelop - My first house was a house-hack in Pensacola, FL. I actually had not heard of BiggerPockets at the time, and my analysis has definitely matured since this first purchase. However I still hold on to it today (now its a full time rental as I moved to San Diego, CA).
Location: Pensacola, FL
Property Description: 3/2 1250 sqft new construction home in a cul-de-sac neighborhood north of town. I was moving down to Pensacola for the military, and I knew real estate would be a great long term investment.
Price: $139,000, Financed on a 15 year VA Loan - I put $20,000 down and got a rate of 2.25%. PITI comes out to $950/mo.
Strategy: While I lived there I rented out two of the rooms to buddies from work. I was able to get $1000/mo in rental income which offset the entire mortgage. After utilities I paid around $150/mo to live in the property.
Outcome: I got orders to move after about a year and a half. The Pensacola realty market has appreciated significantly since I purchased the home. It looks like I would be able to get high $140s if I were to sell today (although that is just a "paper gain"). I still hold onto the property and I rent it out for $1200/mo. After expenses and a reserve for future repairs I about break even. However, since the home is on a 15 year note, my principal pay-down is about $8000/yr.
What I would have done differently: If I were to do it again, I would have looked harder to find a multi-family that I could control with the same down payment (or lower - utilizing the VA loan) and amortized it over 30 years to increase my margin of safety for unexpected expenses. Although I don't get a huge amount of cash flow from this property, it provided a great education in rental property investing and spurred me to find BiggerPockets and continue down this path.
- Investor · Harrison, AR · Member since 2017 · 42 posts · 10 votes7y
We Purchased our House Hack about 4 years ago. 3 bed 3 bath house with a pool and with a 1 bed 1 bath guest house. It is located about 4 miles from the Buffalo National River, a very popular Vacation destination.
We fixed up the guest house and pool for nightly rental, listed it on Airbnb! After all expenses we profit about 5K per year!
Best thing we have ever done!
- Realtor · Owensboro, KY · Member since 2018 · 33 posts · 22 votes7y
Hi, I'm from Owensboro Kentucky and am actually about to start my house-hacking journey. I am closing on a duplex in a few days.
I have had my current house for sell for a few months to get away from our $1100 a month mortgage payment, and it recently just sold. I am taking the equity I have in it, about 20k, and putting a down payment on the duplex which I bought for $103,500.
My new monthly mortgage will now be $640 per month with one side renting for $525 and the other side I am going to live in. So my monthly payment went from $1100 to $115 per month. Yay!! So I am basically living for free.
I am up for any helpful tips and any encouragement as a begin this journey in the very near future.
Thanks!
- Owensboro, KY · Member since 2017 · 8 posts · 6 votes7y
Cool story! I am actually from Owensboro and a firefighter. I work for the Government at Fort Campbell.
We just sold are house in January which had appreciated 45K in the 5 years living in it! It was a $1,300 payment. We bought a fixer upper for 90K and currently paying $617 a month. We did a 5% down owner occupied loan so having to pay pmi. We are almost done with the renovation putting in around 35k. I am hoping it will appraise for 160k and going to refinance into a 0% VA loan! So I am BRRRING to myself. Going to buy another property with the money I am getting back and hope to pull and extra 10-15k out! Since it will be a VA loan I wont have to pay pmi so my payment should only go up to around 800ish and will have another property to offset that 200!
- 7yBryan DruryPro MemberInvestor · Owensboro, KY · Member since 2008 · 131 posts · 65 votes
@Glen Robinson,@Ethan Board, For you young people here it is. Got married in 1988. We wanted to live on our farm but no house on the farm. Bought a used single wide house trailer and moved it in for $12K.Lived in it for 5 years, mice got bad, wife said I'm moving to town with or without you. I'll go!!!Rented out the trailer for 10 yrs collecting $350/month.This paid 3/4 of new house payment. The problems were this. Trailers depreciate, not appreciate. Had to give it away to build a new home on that site.Didnt think long term. We house hacked that next house, and the new one we built on the farm. But those are stories for another day. Seriously, this strategy has been around for as long as man needed housing. It's just maximizing an asset that costs alot to buy and maintain.If more people took action towards this strategy it could improve a lot of household finances.
- Owensboro, KY · Member since 2017 · 8 posts · 6 votes7y
@Bryan Drury want to be in your shoes 1 day thanks for all the advice and contractor recommendations! Call me sometime you get a chance to check out my house!
- 7yMatthew Irish-JonesBusiness MemberReal Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
Bought my first double with my wife in 2011 with an FHA loan for $140K. It brings in just shy of 3K per month now and is worth over 300K.
Irish Jones Realty4.948 Reviews - 7yTravis WylieBusiness MemberProperty Manager · 17112 · Member since 2016 · 271 posts · 151 votes
My first house hack was in September 2015. I bought a 4 unit property in midtown Harrisburg. I didn't know anything about real estate investing at the time and really had no money saved up, but had a nice chunk of change in 401(k) that I was allowed to take a loan out on. Since the loan was for a primary residence I was able to get a 15 year loan. I offered full asking price with max sellers hep on an FHA loan (6%). I look back at how highly leveraged I was because not only was 97.5% of the house leveraged but I also borrowed the funds for the down payment (very risky). Luckily, I lucked out in that the house was cash flowing from day 1. Two of the units were already occupied, and those rents covered my PITI. My friend moved into the third unit, which was straight profit that I could throw towards personal utilities ($725 a month). After getting paid to live here, I quickly saw the power of real estate and started learning as much as I could. I'm not up 14 units in 3 years and I have no doubts that it was my first initial house hack that allowed me to sky rocket my wealth very quickly. If it's suitable to a person's lifestyle, I would highly recommend house hacking as a great first investment to get into real estate investing.
- Medford, OR · Member since 2019 · 9 posts · 1 vote7y
Thanks for sharing! I'm looking to house hack my first investment property, and I appreciate the scary stories to keep me from getting too giddy.
- Realtor · Owensboro, KY · Member since 2018 · 33 posts · 22 votes7y
@Glen Robinson that’s awesome sounds pretty much like us. We’ve only been at our home for 3 years so not much equity but the main thing is we are getting out of it so it’ll be all good.
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