First deal - house hacking. What do you think?

[Samuel Carmichael]

Hi Rhode Island, and Providence BP'rs. 

I found a fairly interesting way to structure my first deal and I am wondering what you think of it.

I have under contract 60

Linden street Pawtucket RI  MLS1123800.

It was a forclosure listed at 169,000. 

I got it under contract contingent on Rhode Island renewal program and 3.5% FHA.

Price 169,000

Offer. 157,250 

(3,000 back for closing)

downpayment (20,000) Rhode Island renewal plan.

Total mortgage. 137,250 

So long story short, I pay 2,000 in closing costs - and get the state of RI to give me 20,000 on a downpayment. It was listed at 169,000 and we got it under contract for 157250 with 3,000 back for closing.

It's a 3 BR, 2 BR single family w/ a partially finished basement.

One of my exit strategies since I must live in home for 5 years in order to not have to repay the 20,000 grant - is to rent out then3 brs up stairs with private bathroom, and full house access for 1,000.

I test posted an ad on Craigslist as was getting 1 person a day interested in it.

I would live in furnished basement and after 5 years and 20,000-30,000 of mortgage paid down by the renters - hopefully sell for the market value or hold for my rental portfolio I am starting.

It was hard to use the calculators for this because I was renting and living but I calculated 1400 expenses including 5capex   5% vacancy full landlord utilities and all that jazz.

Seems like it would still cash flow $100 if you could rent it out for 1600-and break even for 1500.

But I was more or less thinking of getting some instant squirt to pull out later in 5 years after sale or just in general to use for more deals.

Also wholesalers in Rhode Island I am looking for you. Looking for low value cash deals or....would consider partnering with a wholesale

Pro(20+deals) to split profits if you teach me the paperwork and systems better.   My skills are on the phone sales (extremely high Level) in person sales ( high level) and taking action. Not a tire kicker. I love to close deals

Long story short I get into the property w/ only inspection money and 2,000 dollars. Plan to sell after 5 years and hoping for 20,00-50,000 pure profit.

http://m.estately.com/listings/info/60-linden-st--...

Sam

[Anthony Thompson]

Sam, that's a lot of info. My bullet point thoughts are:

* You have to live somewhere; if you can make your residence also provide some rental income and property management experience, so much the better

* Do you actually want to live in that house/area, apart from the #s?

* Based on the house & area, what kind of tenants are you going to get?

* When you go to sell, are other people going to want to buy the house/area?

* Free money is always awesome; take it when you can get it

* However also read the fine print; besides the 5 year thing, make sure there's not also a clause saying you can't rent it out

Free government money is great, but just read the docs. I once insisted on reading the 25 pages of documents that accompanied a no interest lead renovation loan. Turns out buried on page 19 was something saying for 5 years I could only rent the units to people who made 40% or less of the median income, or something to that effect. Made the no interest loan pretty expensive - I passed.