House hacking a 2 family for my first investment/residence

13 Replies

Hey folks,

So the time has come to finally move forward with a home/investment purchase. I am currently looking to house hack a 2 family home in a town next to my job. Was wondering if this looks like a good deal on paper. I have already been pre-approved for a FHA loan. I would live in the one side and rent out the other, then eventually rent out both sides when I purchase a single family home to start my own family. I would not be using a property management company since I would be living on site. The town this is in is Wayne, NJ. A very wealthy great town with a great school system and no major crime. Last year the properties appreciated almost %9 here overall.

Asking price $349,000

My offer $330,000

Appraisal came back at $358,000

Monthly mortgage amount $2029.23  (includes property taxes currently set at $5987)

Yearly Insurance (est) $1100

30 year loan, 15k down (closing costs an estimated 8k more) @ 4.14% APR

One side Is rented out currently for $1700 and the other i could for maybe $1600-1800  ( its a little dated). 

Anything I am missing anything here or just does this seem too good to pass up?

DJ

Nice find.  It sounds decent for your first house hack.

Should probably make sure it's not in a flood zone.  

How did you find the deal if you don't mind me asking? I don't think I remember seeing too many multis on the MLS in Wayne at all.

Good luck and let us know how it turns out. 

Sounds like a great first house! We self manage from across the country. So it is totally doable once you move out!!

Sounds like it could be a good house hack. How many bed & bath per unit? Does each unit have separate meters for utilities? Who is responsible for the water bill? That can be an overlooked cost if they are not metered properly. 

@Alex W I actually found out about it from a man who currently owns it (I am on the rotary club board for two separate towns with him) it hasn't even been posted to MLS or anything yet.

No the house is not in a flood zone at all which was my biggest concerns.  both are a 3 bedroom 1.5 bath set up with family room and separate dinning room.  Separate utilities Water would be paid by me unfortunately.  however I figured that into the rental price. 

I submitted my offer to him today, now the waiting begins.

@DJ Thompson

 It sounds like a great deal. Make sure you get a good home inspector to go through with a fine tooth comb. That'll help you factor any foreseeable repairs into your budget. 

Additionally, check out the rent rolls of the current tenant. Are they paying? How long have they been there? It's good to know who/what you're inheriting, even more so when they're going to be your new neighbor.

Congrats on a good find!

@DJ Thompson It looks like a good deal to me. I would buy it. Of course, as is often stated on this site purchase costs to rent ratios vary greatly from place to place. I don't know anything about your area. 

Twenty years ago my first house was a duplex in Boise, ID purchased with an FHA loan. $112,500 purchase price with rents of $650 per side. Rates were higher then. I think our payment was right around $1,000/mo.

We had our first child there and then moved to a single family when my wife was pregnant with our second - about four years in the duplex total. It worked out ok for us.

I did some landscaping which I liked when I lived there, but it was too high maintenance when we moved and I managed it as a landlord.

I did some "home improvements" because we were excited about our first house, which in retrospect did not help might have hurt the rentability.

One year after we moved to a house, my wife got a job offer out of the area and we moved. We had a hard time selling the duplex and the marginal profit of a rental I could manage personally turned into an at best break even rental as an absentee landlord. Boise had had double digit appreciation for several years when we bought the place, but it went flat right after and as you know with a 30 year FHA loan we started out with less equity that it would take to finance the resale costs and we were paying less than $100 to principle every month.

After a couple of years treading water as an absentee landlord, we were able to sell it at a modest profit - which we put back into rentals locally. Those investments have really paid off. So, I guess you could say that it was all because of that first purchase.

I don't know if my story is interesting to you. I just wanted to say that while I think you found a good deal and are making a wise move, It really is a business and there are likely to be ups and downs.

Great find! The tax is unbelievable low for Wayne. Investigate deeper in why the tax is so low. Good luck!

Hey guys,  

No the deal did not go through.  I was out bid with an all cash offer.  Hard to argue that.  However I am one week away from closing on a different property in my hometown.  Purchased with only $4200 down and had the seller cover all my closing costs.  I am going to live in it for two years then house hack another condo or 2-family.

DJ

Originally posted by @DJ Thompson :

Hey folks,

So the time has come to finally move forward with a home/investment purchase. I am currently looking to house hack a 2 family home in a town next to my job. Was wondering if this looks like a good deal on paper. I have already been pre-approved for a FHA loan. I would live in the one side and rent out the other, then eventually rent out both sides when I purchase a single family home to start my own family. I would not be using a property management company since I would be living on site. The town this is in is Wayne, NJ. A very wealthy great town with a great school system and no major crime. Last year the properties appreciated almost %9 here overall.

Asking price $349,000

My offer $330,000

Appraisal came back at $358,000

Monthly mortgage amount $2029.23  (includes property taxes currently set at $5987)

Yearly Insurance (est) $1100

30 year loan, 15k down (closing costs an estimated 8k more) @ 4.14% APR

One side Is rented out currently for $1700 and the other i could for maybe $1600-1800  ( its a little dated). 

Anything I am missing anything here or just does this seem too good to pass up?

DJ

 Gotta love those ridiculous NJ taxes (I grew up there). Best of luck on the new one!

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