Living expenses $0: thanks to this house hack!

[David Lecko]

Investment Info:

Single-family residence buy & hold investment in Carmel.

Purchase price: $194,000

Cash invested: $9,700

This is my first house! With 5 bedrooms in an A-Class neighborhood, I rented out 4 bedrooms each for $550 per month and lived in the 5th. The monthly mortgage (including taxes and insurance) is about $1300 per month, so that gave me some extra cash every month in addition to living for free. Now it is a full-time rental property.

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

I wanted to reduce my living expenses before I quit my 9-5 job!

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

I found this deal on the MLS. It was a couple hundred days old listing. Most of the negotiations involved my list of things needed fixing before closing. There was mold in the attic from a previous hole in the roof and we made sure it was fixed properly before closing.

How did you finance this deal?

I used a 5% down primary residence mortgage.

How did you add value to the deal?

I added value to this deal by bringing 4 friends to rent rooms and make it cashflow!

What was the outcome?

I stayed in this house with my 4 friends for 9 months after I quit my job. Then my business started doing well enough that I didn't need roommates anymore, so instead of kicking them out, I got an apartment. Later they moved out and I found a new family to rent the entire house.

Lessons learned? Challenges?

The biggest lesson I learned was to use a lease document! Since we didn't have a lease in place, this became their word vs mine. We each forgot exactly what was agreed upon on several things. Firstly my roommates thought I was responsible for cleaning the house after move out. I thought they were responsible. We didn't have anything on paper, so ultimately I took care of it. Another thing was the actual move out date. I thought I asked for them to give me 90 days notice. They gave me 30.