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Alex Petsopoulos
  • New to Real Estate
  • Alexandria, VA
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First Deal/House Hack in Northern VA

Alex Petsopoulos
  • New to Real Estate
  • Alexandria, VA
Posted Nov 4 2022, 05:55

Hey BP! My fiance, Genevieve, and I just completed our very first deal, a house hack in Northern VA. We're both 22, and we graduated from Virginia Tech in May- Go Hokies!! We'd love to share some of the numbers and details about our house hack, with the hopes of inspiring other folks looking to get started in real estate. We certainly are not experts, as this is our first deal, but we are happy to provide any help we can!

Before we get going, a huge thank you to @Daniel Amsalem and his wife for mentoring us through this process. The format of this post is stolen shamelessly from them.

Investment Info: 3bed/3bath townhouse in Northern Virginia, three levels. We walled off the dining room into our bedroom, turning our little home into a 4bed/3bath!

Upstairs: 2 bedrooms and a full bathroom

Main Level: Kitchen, living room, 1 bedroom, and 1 full bathroom

Basement: Walkout with 1 bedroom, living room, 1 full bath, kitchenette, and washer/dryer

Purchase price: $574,900

Cash invested: $32,000 = $17,000 Downpayment + $3,000 Closing Costs + $12,000 Renovations/Furnishings

What made you interested in investing in this type of deal?

Poverty. My fiance and I just graduated college, and we had no desire to fork over a huge chunk of our income as rent. We lived like monks throughout school, eating rice and beans, riding our bicycles in the rain to class, traveling/sleeping in our Honda CRV for vacations, and working internships during the breaks to save for our downpayment. I must have listened to 100 BiggerPockets podcasts throughout my last two years of school, and I read the House Hacking Strategy by @Craig Curelop. Following Brandon Turner's advice, Genevieve and I analyzed deals on Zillow daily for about a year and a half before we started putting in offers, with lots of helpful advice from @Joaquin Camarasa.

How did you find this deal and how did you negotiate it?

Our agent, @Russell Brazil found the deal on the MLS. Negotiations were strange for this property. We submitted an offer at the asking price, and the sellers sat on it for four days. Then, they emailed Russell asking him to raise our offer. Obviously, we weren't going to bid against ourselves (they had no other offers). So we pulled our offer and started looking at other properties. However, they emailed us a few days later asking us to resubmit our offer, saying they would accept it. We did, but this time with a 3% seller subsidy for our closing costs. They negotiated that down to 1.5%, and we got under contract with a better offer than we originally had sent them!

How did you finance this deal?

We put 3% down and went with a conventional loan to secure a better rate (5.5%), shoutout to @Upen Patel at the Federal Savings Bank for coaching us through the lending process.

How did you add value to the deal?

We walled off the upstairs living room into our bedroom and added a closet. Then, Genevieve furnished the basement while I listed it on AirBnB. We have been using the MTR strategy (Medium Term Rentals) to comply with the 30-night minimum stay laws in our county, and right now, we are booked out until June!

What was the outcome?

We've been living here since the end of August and our "rent" (including our part of the mortgage, capex, expenses, and vacancy) is under $1000/month. When you factor in loan paydown and appreciation, our "net" housing cost comes down to essentially $0 for the year. When we move out, our conservative estimates have the property cash flowing over $200/month after all expenses, an 8% Cash on Cash Return!

Lessons learned? Challenges?

We considered buying a smaller, less expensive property for sale just up the road for a lower-risk investment. But, Russell showed us how it made sense to spend a little more to get a lot more space in our current property. Because of that decision, we own the largest house in our neighborhood, and bring in an extra $1000/month in rent! 

Also, we learned the value of connecting with people who are doing exactly what you want to do. When you find someone who already is where you want to be, suddenly, your crazy ideas don't seem all that crazy! We got a lot of pushback from friends/family when we told them what we wanted to do by house hacking. While we know our friends and family absolutely had our best interests at heart, sometimes you have to ignore conventional wisdom if you want to get unconventional results.

Please feel free to message me if you have any questions. As I said, we are new to this game, but we are happy to help anyone just getting started in any way we can!

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