3rd house hack

[Jeff Schemmel]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $479,800
Cash invested: $6,000

Contributors:
Adam Tafel

Purchased a Duplex with 3rd floor non-conforming unit that has a kitchen/bath/large bedroom. Househacking 2nd floor and working to make the 3rd floor conform. Room for a garden level unit in the future + second side lot can be split/built on. Plan to build another triplex next door in the next 2-3 years.

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

Wanted a househack with extra bedrooms, larger unit. Wanted some value-add, and wanted to put low money down.

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

Adam Tafel sourced this one off-market. I represented myself, seeing it the same afternoon it was first available, and offering the same day. Seller preferred an owner occupant, and needed some flexibility to find their next home and take their time to move out so I added a rentback to the deal.

How did you finance this deal?

7/1 ARM @ 5.75%. Offered with my commission rolled-in to keep my down payment super low, and seller paid my closing costs @3% of the purchase price. Collected rent from main-floor tenant and rentback from the seller prior to move-in. Total cash invested ~$6,000 after rentback/rent collection factored in.

How did you add value to the deal?

I plan to have a survey and split the lot, then refinance out of the ARM in the 3 year horizon. I plan to use the value of the 2nd lot, and some personal cash to obtain a construction loan to build a triplex, add parking, and a garden level unit to the existing building to create 6 units total.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Adam Tafel sourced the deal, and Reyna Rosseau with Cross Country Mortgage financed the deal.