House hacked first investment
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Denton.
Purchase price: $298,000
Cash invested: $16,000
Fourplex house hacking. Purchased with an FHA 203(k). Purchase price $265k but added in remodeling costs. After down payment and closing costs we financed $298K. We are under contract to sell it for $550k and looking to pay debts, buy a house and buy another investment property.
What made you interested in investing in this type of deal?
I have always wanted to own investment properties. My father did that. It just took this long to be able to.
How did you find this deal and how did you negotiate it?
We had seen the property listed but by the time our financing was approved it was already under contract. I contacted the agent and asked if he would let me know if that deal fell through. It did and we made an offer the next day which got accepted.
How did you finance this deal?
FHA 203(k)
How did you add value to the deal?
We updated the entire building. Replaced front door and all windows. When we bought it the rents were $720 a month. Now they are $1100 a month. With us living rent free for 4 years in one unit we still clear $500-$700 a month.
What was the outcome?
Awesome. We would have continued to rent it but we needed to withdraw the equity. It's worth almost double what we paid for it now.
Lessons learned? Challenges?
We over improved it at the beginning and put too much of that improvement on credit cards, which is why we now have to cash out to pay them off. Partly that was due to some people breaking their leases when we took over the property which we had not anticipated. But partly it was our desire to get everything done on the front end instead of over time.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Tartan Real estate helped us with the purchase and Homebridge did the financing.