Surprise house hack as first purchase

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Surprise house hack as first purchase

Joe Stone
Member since 2021 · 5 posts · 0 votes

Investment Info:

Single-family residence buy & hold investment in Bloomington.

Purchase price: $101,000
Cash invested: $20,000

Owner Occupied and working towards my first house-hack. 100-year old former boarding house. Plumbing for three kitchens (one currently functional) and three bathrooms (two currently functional). Had a roommate for the first year. Now renovating, and hope to be ready for tenants in August 2021. Plan B is roommates. Once it is cash-flowing and repaired, I plan to use the equity to purchase another property if I enjoy this process. So far it is fun.

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

The price and location was hard to turn down. Houses go for twice what I paid in this neighborhood.

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

I was actually a tenant at this location with two other roommates. The landlord approached me, named his price, and I said yes. I wasn't even pre-approved or looking. I was just living cheap and saving as much as possible for opportunities, and it presented itself.

How did you finance this deal?

20% down and mortgage for owner-occupied.

How did you add value to the deal?

I took it as-is. I believe this is considered no contingencies? I learned the basics of pouring concrete and trimming trees immediately, in order to please the insurance company. The house is filled with junk from the former owner and tenants and I'm learning all about which donation/recycling center take which materials.

Lessons learned? Challenges?

The house needs a lot of work, and most of it is sweat equity, but I'm warming up to HELOCs/Refinancing to move faster. I was debt-free before this purchase, but I'm hoping to pivot towards being employer free if I can make the numbers/lifestyle work in the next few years. So... There will be lessons, I'm sure, lol.

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

This was an unlisted FSBO, with the owner approaching the seller. Shelly Baumgartner at IU Credit Union made it easy and was patient with my questions and running numbers.

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  • Woon Chung
    Member since 2021 · 3 posts · 0 votes
    5y

    Congratulations on your first!

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  • Cody Benedetto
    Member since 2021 · 67 posts · 52 votes
    5y

    Joe, love this! Do you pictures of the work you did, would love to see how it turned out? Also, how did the FSBO owner approach you? I'm always interested in the nuances to off market FSBO deals.

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  • Joe Stone
    OP
    Member since 2021 · 5 posts · 0 votes
    5y

    Thanks Chung and Cody! I'm new to reno/finance/real estate, so my progress isn't as fast as most folks here.  This was a surprise purchase. I was a tenant at this property for about three years. I had two roommates. One lived here for 12 years, and one was here for 4 years. The landlord would stop by once a month to pick up rent, and chat.  In early March 2019 he called and said he needed to talk to us. I invited him over, and in almost one breath he tells me he is putting it on the market unless I want to buy it as-is for $100k.  I immediately went to the bank to get pre-approved, then called two of my landlord friends to make sure the purchase wasn't too good to be true, then hired a home inspector to learn the facts, and my loan officer represented me at sale.  I think it took 6 weeks from start to finish.  

    One roomie left almost immediately, and the other stuck around for a year paying me rent.  I had several people looking to rent, but I was uncomfortable with the pandemic and was in kind of analysis paralysis.  

    The house has been a rental for at least 50 years, but possibly has always been one.  It was/is filled with stuff, and this year has been spent learning how to get rid of everything, including stuff that belonged to friends that rented here before.  Below are pictures of some of the basement progress.  I'm hoping to turn that into a base of operations for further rehab this spring, and perhaps renovate it into an apartment for myself, while renting out the upstairs.  Others would have had this rehabbed in a few months, but like I said, I am new to this and it was a surprise.  I like it though, even without the tenants.

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  • Woon Chung
    Member since 2021 · 3 posts · 0 votes
    5y

    work is defiantly coming along. nice work

    0Reply
  • Joe Stone
    OP
    Member since 2021 · 5 posts · 0 votes
    5y

    oh. I want to add that I am a musician, and that this has been a "music scene house" for 15 years.  Meaning that musicians lived here, played shows here, touring bands crashed here, etc... and there is some interesting garbage, lol.

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  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    5y

    @Joe Stone congrats on this investment! Looking forward hearing more from you about the progress on this project.

    0Reply
  • Joe Stone
    OP
    Member since 2021 · 5 posts · 0 votes
    5y

    Thanks @Dmitriy Fomichenko 

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