House hacked my first home in 2007, led to HELOC and flipping!!!
Investment Info:
Single-family residence fix & flip investment.
Purchase price: $193,000
Cash invested: $35,000
Sale price: $272,000
This was my first purchase as a real estate agent. I sold myself the house, so earned a sales commission and moved in. The basement was finished nicely already with a bedroom, living room, 3/4 bathroom, and laundry. I moved in a few roommates that each paid $500/month to rent from me. It was a house hacking situation. I ended up remodeling the kitchen and main floor bathroom and lived in it. I had equity, so I was able to pull out a $35K HELOC loan agaist it, which gave me the cash to take on my first true flip property (2534 Fillmore Street NE in my investments). When I did sell in 2014, all of the gain was tax free as it was my primary residence for over 2 years, which was a huge plus!
What made you interested in investing in this type of deal?
I had researched the area. This was bank owned in a prime spot of NE Minneapolis. I had just gotten my real estate license, so the buy side commission helped a lot. The house was in great condition on the exterior, great mechanicals, and recently finished basement I could live in while I did the rest of the renovating.
How did you find this deal and how did you negotiate it?
Through the MLS and I negotiated with selling agent that represented the bank on the foreclosure.
How did you finance this deal?
5% down conventional loan.
How did you add value to the deal?
Refinished hardwood floors, paint, removed wall from kitchen to dining, new kitchen, new main floor bathroom, new carpeting upstairs.
What was the outcome?
I walked from the closing with about $40K tax free after living there for 7 years and leveraging the equity line of $35K on my all cash fix and flips.
Lessons learned? Challenges?
I got pretty lucky with the area and general condition of the home. I learned a ton about construction with this one.
