All Forum Posts by: Andrew Lekowski

Investment Info:

Small multi-family (2-4 units) wholesale investment in Enterprise.

Purchase price: $90,000
Cash invested: $1,000
Sale price: $110,000

My second wholesale where almost everything that could go wrong, did go wrong. Here are the lessons that I learned that I hope to share with other investors and wholesalers!

From the beginning of this deal to the end, I exercised full transparency with both my Assignee and the Seller about that I intended to make a profit assigning this deal, and I even disclosed how much. Lesson Learned: transparency can be a double edged sword. Some people appreciate it, others will use it against you.

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

This fourplex would have made a great buy and hold for me. Four units, $2200 monthly cash flow potential, and less than $10k of rehab work, this deal would have been a slam dunk either way. I chose to wholesale based on the fact I am moving to a different military base all the way across the country, where I'll be buying a primary residence in Tacoma, WA ($$$$). The extra cash on hand definitely made wholesaling this deal the better option!

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

This fourplex was next door to my own fourplex. I had contacted the owner prior to learn about the neighborhood and see how we could tag team the investment. I got a lawn care company that could cut both our sides at a discount, and that opened a door to negotiations. We exchanged about 3 sets of offer/counter offers until we came to agreement: I would wholesale his property to a cash buyer with no inspections. I believe he was motivated to sell because he was evicting a bad tenant.

How did you finance this deal?

I paid $1000 of personal earnest money to the escrow account with an assignment contingency. If I could not find a suitable assignee, I would have closed all cash for this property and used the delayed financing exemption. It was a great deal both ways!

After several weeks of crazy interest, I found a great assignee who agreed to be the "and/or assigns" for the contract, at listing price. However, once the Seller found out what my assignment fee was, he told me he was going to back out!

How did you add value to the deal?

This fourplex would not have been worth $110,000 if I had not renovated my fourplex to the way it is now. Before, my fourplex was basically a crackhouse and only worth $32,500 in its past condition. Now, it is worth $125,000 appraised, and I rent out to great tenants with 700+ credit scores!

I added value to this wholesale deal through my knowledge and work on the neighborhood and investor targeted advertising. Unfortunately, the Seller did not see it this way, leading to this outcome:

What was the outcome?

After legal negotiation fees, double closing costs, and a month of nerve racking anxiety, we got the Seller to close! We found out the day prior to closing the Seller had a change of heart, and it was a huge surprise because we thought we would have to settle. Because my assignee was abroad and could not wire the money, I ended up closing the transaction myself that very day and then double closed with the assignees a week later once they flew into the US to make the wire.

Lessons learned? Challenges?

Always make sure you get ALL the Owner(s) on the contract. The loophole my Seller cited for trying to back out was that his "business partner" was a 50/50 member of the LLC who owned the property and that his partner had verbally committed, then changed their mind.

Well, this "business partner" was actually his wife (happily married, not divorced). Imagine! Now lesson learned: always check public records to ensure all needed signatures are present on the contract and subsequent closing.

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

John Peek out of Andalusia, AL was the real estate attorney who I turned to when the deal almost went sour. His legal advice saved the deal, because if I was left to my own remedies of "good faith" negotiations, I would have played all my cards and been forced to fold. That goes into my second lesson learned:

Have a good attorney in your Rolodex. When things turn bad, don't be like me and have to cold call 20+ attorney offices to get legal advice. Take an attorney out to dinner.

Investment Info:

Large multi-family (5+ units) buy & hold investment in Elba.

Purchase price: $90,000
Cash invested: $13,000

10 unit mobile home park in rural Alabama. Includes 9 park owned homes and 1 single family house (2/1).

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

1) Forced Scalability. Assuming ownership of multiple units forces you to put the systems in place to run your business. Before this deal, I self managed, self lawn care, self everything.
2) I love the asset class! Recession proof, good cash flow, lots of doors.
3) For this particular deal, being located in rural Alabama at a

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

My partner, a West Point graduate that was in the year ahead of me, approached me with this deal. He found it on Zillow the same day it hit, and he knew I had run the numbers on several other Mobile Home Parks for sale in the area and had been researching buying a mobile home park for myself. The numbers worked at listing price, so we negotiated the Seller pay all closing costs and got it under contract within 24 hours of listing!

How did you finance this deal?

Financed through a local regional bank in the area. They offered a 20% down, 15 amortized commercial loan with a 5 year balloon. Financing was the tough piece for this deal: we fought hard to get the 15 year amortization. All other banks only met us at a 10 year. We also fought hard with our lender to give us the option to sell all mobile homes on the property and keep the proceeds, so that if we decided to sell off the park owned homes, we could do so.

How did you add value to the deal?

Right off the bat, two homes became vacant and we renovated them and put them back on the market with increased rents. Old owner had tenants pay far below market value rents, so we intend to raise rents as each home turns up vacant.

It appraised for $20,000 more than our purchase price, so we are sitting at a good equity position. Other than that, we plan to add value through systems and automation (old owner used to do everything himself)

What was the outcome?

Currently, we are cash flowing well and intend to keep doing so!

Lessons learned? Challenges?

Taking action beats lack of action every day. From the beginning, with the current rent roll, we had fairly thin margins on cash flow. After running the numbers many times, we decided to go ahead and do it. We jumped in, and so far the journey has been great! There is truly no better education than a hands on education.

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

Here is our list of vendors that we would recommend!

David Bailey at First National Bank of Hartford
Kaye Ellis with Lake Realty (Listing Agent)
Malissa Gilley at Century 21 Regency (Our Property Manager)
Wes Davis with Trophy Turf (Lawn Care, great service)

Also, shout out to my partner, Austin Montgomery, who taught me Real Estate Investing before I even got started! Glad to be tackling on a project with him--very knowledgeable active duty real estate investor and Blackhawk pilot.

Investment Info:

Mobile home wholesale investment in Ozark.

Purchase price: $12,000
Cash invested: $1
Sale price: $17,500

This deal was originally found by another more experienced local investor that I met at a real estate meet-up. He contacted me, asking if we wanted in on the deal. He wanted someone with high energy and time, and we had some to spare! Originally intended to be a buy and hold for him, we decided that because it was located outside of our investment radius (~45 minute one way drive) we would try to wholesale it. The transaction itself was an extended double close.

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

It sort of just happened! An experienced investor brought a great deal to the table as a buy and hold, and half way through we decided to wholesale it! Great deals give you a lot of exit strategies. We split everything 50/50 with no prior operating agreement, LLC, or paperwork. Great to do work with honest people! We tracked all income and expenses down to the cent through a simple Google Sheets page.

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

All done my my partner. The property itself was 2.68 acres of land with a beat up mobile home on it. The tax-assessed value of the land was $17k itself, so all in all a $12k contract price was a safe investment. We just needed the right assignee! This wholesale was our first ever, and we knew nothing about wholesaling, but thanks to Google and my BiggerPockets education, we made it happen!

How did you finance this deal?

Paid for in cash by my partner. If things did not work out, I would have taken a 50/50 equity stake in it as a buy and hold, however the way everything worked out it was not necessary.

We got it under contract at $12,000 with an early occupancy agreement so that we could begin the advertising process. The only "value-add" work we did was clear out the property: a crazy amount of trash (-$), scrap metal ($), and Facebook Marketplace sell-ables ($$$).

How did you add value to the deal?

Through creative advertising, selling valuables inside, making scrap yard trips, and cutting the grass. In terms of actual work to the mobile home itself, we did not do anything more than clear out trash. All in all, through our sweat equity we added $6251.50 of value to something that originally was only worth $12,000.00. A low risk way to generate some cash!

What was the outcome?

All in all, we made a quick buck, and I learned quite a bit about wholesaling, contract law, and advertising real estate. This was the first partnership I have been in, and it turned out to be a blessing!

After splitting the profit 50/50, myself and my wife netted $3125.75 for about a weekend's worth of work and quite a bit of elbow grease clearing out the property and selling the valuables. With zero money down and as a first wholesale deal, it wasn't bad at all!

Lessons learned? Challenges?

When wholesaling, any sort of financed offer is inferior. In this case, our assignee financed half of the deal through a friend who lent him 50% of the funds. We originally had assumed because these funds didn't come from the bank, the deal would go through as smoothly as cash. Wrong. The friend who provided the financing wanted everything done through a lawyer, which is smart and I would do the same, but it caused our closing to be delayed weeks! We had to do a double close vs. an assign.

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

I would like to give a shout out to my partner Tom Wojtala, and his wife Kerry. They took myself and my wife under their wing and taught us a lot about real estate investing. Prior to this deal, Tom had also given his help while my wife and I renovated our fourplex, and he even went so far as to give us a water heater he had lying around! Great people and even greater savvy investors!

Samuel,

100% with you on the buying new.  We would have bought new with the second replacement, however they were not delivering until the end of the week so it was too long, so we went with a reputable used appliance store in the area that offered a 30 day warranty.

Regarding accepting partial late payments, you have to reissue a notice? If so, is it worth doing ever? Or not even go there.  

Lastly, with the property manager, great point.  We track all our expenses, labor, ect, and it is definitely comparable to that of what it would cost a property manager to do.  Plus we know our time is much more valuable elsewhere. We do plan to put all the units we have on property management in the next several months when we leave the Enterprise, AL area.  I agree that the dollars saved are not worth the cost.  We are doing everything ourselves initially to learn about all sides of the RE business.  This whole experience has validated Pareto’s principle in my mind—80% of your problems come from 20% of your tenants.  And 80% of your profit comes from 20% of your effort.  We are learning what 20% to focus on now and become more scalable.

This is not a guide to how to prevent an eviction in coronavirus America. It is our story regarding a close call with some bad tenants. Our FIRST tenants actually. And here it goes!

This article outlines the experience we had with our true first tenants. Although we had a house hack with two other roommates, living with someone is a lot different than handing someone the keys to a rental property. Let's call these tenants both X and Y.

Throughout this article, I will highlight all the mistakes I made that I believe many beginner landlords may benefit from. Looking back, some of these mistakes I had definitely known better, however actually in the moment with excitement, anxiousness, etc. it is hard to look back and judge. Learn from our mistakes!

So here are all the lessons learned from our close call:

1) Never, ever put off a security deposit during move in.

Initially, when Tenant X and Y applied for our rental, they had the most outstanding scores (relatively). A credit score floating in the low to mid 600's was the best applicant we received given the strong C class neighborhood. No dings on the background check, respectable jobs in the community, and no red flags during the apartment showing. All references checked out (yes, I actually called). Perfect. Everything seemed great during the application, and we turned down several other applicants that had worse credit scores. Everything seemed great until we had a signed lease agreement, and Tenant X called me and said, "hey, is it okay if we split up the move in cost?"

Those words could of and should have been a deal breaker during the screening process, however after the phone call I believed that they would have the ability to pay in one week after the move. And they were on the verge of being our first tenants, so I was very anxious to get them in our apartment to focus on the other three units. So, I adjusted the lease agreement to reflect the payment plan for move in and we allowed them to take early occupancy, which leads to mistake number two:

2) Never, ever allow tenants to move in with the utilities still in your name.

Only applicable if your tenants are responsible for the utilities. All I had based this experience off of was my first property I bought. The old owner allowed us to take early occupancy with the utilities in his name still, and we switched them over at our leisure and back dated it for the day we assumed occupancy.

Whole different ballgame in the rental world. We signed the contract giving our Tenant's five business days to put the utilities in their own name. Five days passed, and we ended up having to shut the power and water off so that they would be forced to put the utilities in their own name as per the contract! We got lucky with this, as during the coronavirus some landlords are restricted to what they can and cannot do with the utilities.

...

Pausing the lessons we learned here, time to get more caught up on the story. So the payment plan for the initial move in falls through come the date we had chosen, and they end up racking up late fees. We serve a seven day pay or quit notice. We work with them and take a partial payment of this initial move in cost so that we can freeze the late fees and so we can guarantee at least some deposit if they lose all ability to pay. Eventually, after much stress, much documentation, and spending too much time trying to get just the initial move in payment, they pay their whole balance including late fees. Cool right? Absolutely not worth it. At any point they decided that payment was not in the cards, we could have been forced to start the eviction process with no security deposit to soften our losses. Huge rookie mistake. Concurrently with this, in the span of one month we had three major appliance breakdowns... in the same unit! Leading to the next lesson learned:

3) We done messed up with the appliances.

Major appliances in a rental such as a refrigerator and a stove oven can be a one-and-done sort of a deal, or they can be the bane of your existence. Initially, when we were doing the renovation on our Fourplex, there were zero appliances. We ended up going to a flea market and buying four refrigerators and four stove ovens. When buying a bulk order like this, quality control is crucial to ensure you are not buying lemons. Our process for quality control was not good.

We had them delivered, plugged in, and we basically ended up doing a partial functions test of everything. For example, we tested the refrigerators and freezers turned on, however, we did not wait until the freezers froze. We tested all the stove eyes, however we may or may not have tested the ovens in all the units. Either way to put it--we did not systematically attack the quality control of these appliances such that it was necessary to give them the benefit of the doubt. And oh, did they take advantage of this benefit.

Within a few days of moving in, Tenant X informs us that the freezer will not freeze. So we communicate this to the flea market where we bought the appliances, and guess what? They refuse to honor our warranty. After calling and texting them and stopping in several times to work out an appliance swap, they end up ghosting us and shutting down due to the coronavirus. We finally track down a refrigerator on Facebook Marketplace, and we ensured we did our due diligence testing this one--worked great. We move this one into Tenant X's upstairs apartment (ugh), which after taking doors off of the refrigerators and entry ways, is beast of a task. Anyway, we leave the apartment with the refrigerator working just great.

Then the oven stops working.

Then this second refrigerator that we just moved in stops working.

Given that the only appliance issue in the entire Fourplex came from these problem tenants, it is very suspicious that they had three appliance breakdowns in the first month. However, because the quality control process we had with the appliances was subpar, we decided to give them the benefit of the doubt on all the appliances and chalked it all up to bad luck. Dealing with these appliances, we spent much frustration, money, time, work, etc. In the end, we learned to conduct better quality control initially including a full functions check of everything we add to our rentals. Additionally, we learned to modify our future lease agreements regarding the appliances. Before our lease stated we would be responsible for any normal wear and tear appliance repairs, however this is too vague and indefinite for my liking. I will now tell future tenants I will give them a grace period with the appliances, and after that they are fully the responsibility of the tenant. This is more common for our market and in no way are we responsible legally to ensure our tenants have working appliances. Lastly, we learned that we need a new vendor for our appliances that will honor their warranty. Even though we had the flea market write down their warranty on the receipt, they still failed to uphold it. They were not a super professional company, so in the future instead of trying to save a few dollars and buy bulk at a bargain, I will seek out bargains only with reputable vendors.

4. Dealing with your tenant's parents. 

This is actually not a lesson learned, as we believe we handled the situation with the parents very well. However it is very important to mention this because it is slightly comical, and it outlines what landlords are truly getting themselves into when renting out apartments. 

During the whole rent not being paid, appliance breakdown fiasco, somehow the tenant's mother gets my number and starts messaging me. She basically starts threatening a lawsuit because the refrigerator in her son's apartment will not work. She calls and leaves voicemails and her husband calls and leaves voicemails. I told Tenant X and Tenant Y that we would not communicate with any party not on the lease agreement for their privacy and as well as ours. Of course, despite reiterating this several times, to the very end of the story we would get messages from the parents. We can absolutely understand why the mother was getting involved (where did the rent money come from in the first place...). And what mom does not want the best for their children? However, in the realm of landlording, helicopter moms have no place. We simply refused to engage. However, when the mom took Tenant Y's phone and messaged me off that threatening to call the police and filing a suit for not allowing them to live for free, things got harder to say the least. We still did not engage and handled all concerns professionally. Next time this happens (hopefully never), we will respond the same.

5) The Cat Indicator. 

Maybe this is highly prejudiced, and I am a fairly new landlord so I may be completely off on this. When a tenant wants to move in with several cats, landlords beware. Through my research, I have correlated there is a strong negative relationship between tenants who have several cats and really, really bad tenants. They go hand in hand actually.

I am actually just joking, as not all cat lovers (sorry mom) are bad renters. However we did make a big mistake. Letting these bad tenants in with three cats... Given the low income area, we did not charge additional pet fees. If we would have, I am sure that these bad tenants would have taken their bad cats elsewhere. I now see that pet fees and pet deposits are crucial! How else can a landlord ensure that a tenant will take care of their pets and the apartment?

Back to the Cat Indicator. In this case, our tenants started off with just three cats. When we came in a month later my wife counted four. Additionally, just the way these tenants lived were disgusting! 10/10 hoarders. There were no walkways through the apartment, with random boxes, wrappers, spoiled food, trash, collectibles (aka where our rent money went), everything in the way. I was appalled. How did I let in extreme hoarders into my newly renovated apartment? You live and you learn, however next time I may be biased with my Cat Indicator.

...

The plot thickens. After the move in rent fiasco, I waited nervously for May 1st. I knew what was going to happen deep down, but I had high hopes. Come April 30th at 10:12pm, exactly, I got a voicemail from Tenant X, that started off exactly like this. "Hey Andrew, um, about this rent thing, uh, my wife's paycheck got messed up..." Direct Google voice translation. They then proceeded to ask for some way to work it out. At this point it was very, very clear--they need to leave.

Come May 2nd, we served them their second pay or quit notice. Apparently the money was in the mail (not falling for that old trick). Come May 4th late fees started. Come May 9th, we are five business days into their pay or quit notice, and it is the weekend. I whip up a document called the Good Faith Notice. In this Notice, I informed them in the lease there was a good faith clause to seek out remediation at the lowest level prior to seeking legal recourse. Then I laid out the options as such:

Options

The following are the options available to the Tenant(s) to end the Dispute in Good Faith. Initialling by the Option the Tenant(s) choose represents pursuing that option. If that Option is not executed properly, they will be void and Option 2 (eviction) will be pursued.

___________Tenant(s) agree to payment of the Total Dispute no later than 12MAY20 before 11:59pm, which represents the end of the Pay or Quit Notice (7 business days since 02MAY20 when it was served for non-payment of rent). Payment includes all rent and all late fees. Additional late fees will be assessed at the agreed upon rate of $25/day for each day not paid (i.e. if it is paid on 12MAY20, an additional $75 in late fees will become part of the Total Dispute).

___________Tenant(s) elect to not pay the Total Dispute prior to 12MAY20 before 11:59pm. On 13MAY20, the Landlord will respond by proceeding with the eviction process and filing for a Summons. If this option is chosen, an eviction judgement will be pursued as well as damages for Non-payment of rent, Non-payment of late fees ($25/day for each day throughout the entirety of the eviction process), all legal fees including lawyer fees, filing fees, damages to the Premises etc.

___________Tenant(s) elect to move off the Premises prior to the eviction process beginning. If this option is chosen, the Landlord agrees to not pursuing a legal judgement against the Tenants. If this option is chosen, the Tenant(s) agree to surrender the Premises in move in ready, fully cleaned condition. All belongings will be moved off the Premises, and it will be cleaned in accordance with the Checklist. The deadline for this option is 12MAY20 at 7:00pm. At 12MAY20 at 7:00pm, the Premises will be surrendered to the Landlord by handing over keys and vacating the Premises. To incentivize and facilitate a smooth transition out of the Premises and to ensure they are handed over in a move in condition, the Landlord will pay the Tenant(s) a half month’s rent ($275 in cash) after the Premises have been inspected and the keys have been surrendered. This option will constitute an early termination of the Lease Agreement.

Basically, I offered them cash for keys. They chose it! They initialed and signed everything, agreed it was the best option, and I gave them a move out checklist and three days to move out. They even seemed chipper. I thought this would be the end of the battle, but I was wrong

6) Lessons Learned from Cash for Keys. 

When you offer this, you can bet your tenants will wait to the last day to move out. You can bet the apartment will not be in move in ready condition. You can bet you will not get all the keys back and even if you did, you will need to change the locks. You can bet their mother will send you messages telling you everything you are doing is completely illegal and that she will call a lawyer and the police (actually this one probably won't happen, hopefully). Regardless, the three days prior to the Cash for Keys Transaction were nail biting. At some points I swore the tenants were going to choose the eviction process. And we were ready for anything. In Coronavirus Alabama, all eviction enforcements were postponed until basically further notice, so if these tenants wanted to stay for free they could absolutely roll the dice and full send the eviction process. They could have stayed for free for well over three months, maybe even more.  Despite all my worries, I ended up getting the cash for the keys.

Now it is the day following the cash for keys transaction, and it is time to go to war with this apartment. Cat smell lingering everywhere, my wife and I will don masks not for the coronavirus, but to not throw up as we clean out the stench left behind from these tenants. After everything said and done, despite the mistakes we made, we learned more from the hard knocks than we could have learned from listening to 20 Bigger Pockets Podcasts. I hope someone learns from this one and doesn't have to go through this as well!

Hello! My name is Andrew Lekowski and this is my first BiggerPockets discussion post.  I am an active duty Army Pilot attending flight school in Enterprise, AL

Just wanted to introduce myself to everyone, and allow this post to bring together other military investors to share their stories as well!

My real estate investing began as soon as I graduated from West Point in May of 2019, with my first deal being a house hack using the VA loan in Enterprise. I am also doing a BRRRR on a fourplex in Enterprise, AL, and I have already done the Buy, Renovate, and Rent part, and once the purchase has seasoned in two months I will be eligible to do a 100% cash out refinance with a local credit union (All In Credit Union).

I am actively searching for my next deal, which will be any real estate asset class (residential apartment, commercial building, storage facility, trailer park, etc.) that has 16 units or greater, that has a potential value add opportunity, and that is relatively recession inelastic.  As for location and price of this future deal, I am flexible based on the merits of the deal, although preferably I would want this deal to be within a 50 mile radius of Enterprise, AL and under $1million listing price.

Here is a question to kick off this discussion: What are the advantages and disadvantages you have encountered of investing in real estate while also serving active duty? 

Investment Info:

Small multi-family (2-4 units) other investment in Enterprise.

Purchase price: $32,500
Cash invested: $50,201

Purchasing a foreclosed Fourplex in cash, rehabbing using 0% APR credit cards, and lessons learned along the way!

How did you finance this deal?

My wife and I saved up enough money to purchase this property in cash! Given the condition of this property, we were able to snag it for $32,500 less the renovation costs. For the renovation, we decided to used 0% APR business credit cards to get free financing, earn signup bonuses, and keep liquid cash reserves during the renovation. We put in around $20,000 on the rehab, and are in the process of refinancing now!

How did you add value to the deal?

Pure sweat equity, with a head to toe full rehab. Check out the pictures!

What was the outcome?

Although we have yet to get this property appraised, we are expecting the ARV to fall within the $150,000 range given comps of the area.

Investment Info:

Single-family residence buy & hold investment in Enterprise.

Purchase price: $1
Cash invested: $1

House Hack, renting out 2/3 of the bedrooms to live for free. Purchased with the VA Loan, using 0% down (we actually got an escrow check at closing, so we got paid to buy this!)

Cashflow pays for Mortgage (Principal and Interest), Taxes, Insurance, AND all Utilities. Strategy is to use this property as three separate units in the future, renting out each bedroom just like we are doing now.

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

Through BiggerPockets, I was first introduced to the idea of the househack. As an active duty military member, I knew I could do this strategy with the 0% down VA loan. The original plan was to buy a small multifamily (2-4 units) and rent out the other units. Upon graduation from West Point and a 10 day house hunting adventure, there were no small multi families on the market! My wife (fiancee at the time) decided that we were still going to househack using a single family home.

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

As first time home buyers, it only made sense to use a real estate agent. On military leave, we took advantage of TLE (basically free house hunting money from the Army) to pay for our trip, hotel, and food moving from Illinois to Alabama. We found it after looking at 20+ homes for sale. We negotiated it through our agent, and ended up getting it with several thousand off listing, negotiated repairs, and an early occupancy agreement.

How did you finance this deal?

VA loan, 0% down. Used Veterans United.

How did you add value to the deal?

Mainly a turn key property. There was some wood rot up front which we had the seller replace and waterproof with siding of our own choice. The backyard we did landscaping and added a shed. Throughout the house and garage we added a ton of shelving.
The biggest value add we did was using this property as a house hack. Because this single family 3bd/2bth has two stories to it, we rent out the entire upstairs to other Army flight school students. Through this strategy, we maximize our return.

What was the outcome?

Living completely for free!

Lessons learned? Challenges?

The big piece that makes this house hack unique is doing it while married. Married with roommates is not for everyone nor every property. Finding the property and spouse that supports this strategy was a tough process, and I definitely made the right decision (on both) ;)

In the end, it all comes down to opportunity cost. Does the cost of having roommates while married outweigh the financial benefits of living for free? In our case, it was a yes, and we would definitely recommend it.

Investment Info:

Single-family residence buy & hold investment in Enterprise.

Purchase price: $1
Cash invested: $1

House Hack, renting out 2/3 of the bedrooms to live for free. Purchased with the VA Loan, using 0% down (we actually got an escrow check at closing, so we got paid to buy this!)

Cashflow pays for Mortgage (Principal and Interest), Taxes, Insurance, AND all Utilities. Strategy is to use this property as three separate units in the future, renting out each bedroom just like we are doing now.

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

Through BiggerPockets, I was first introduced to the idea of the househack. As an active duty military member, I knew I could do this strategy with the 0% down VA loan. The original plan was to buy a small multifamily (2-4 units) and rent out the other units. Upon graduation from West Point and a 10 day house hunting adventure, there were no small multi families on the market! My wife (fiancee at the time) decided that we were still going to househack using a single family home.

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

As first time home buyers, it only made sense to use a real estate agent. On military leave, we took advantage of TLE (basically free house hunting money from the Army) to pay for our trip, hotel, and food moving from Illinois to Alabama. We found it after looking at 20+ homes for sale. We negotiated it through our agent, and ended up getting it with several thousand off listing, negotiated repairs, and an early occupancy agreement.

How did you finance this deal?

VA loan, 0% down. Used Veterans United.

How did you add value to the deal?

Mainly a turn key property. There was some wood rot up front which we had the seller replace and waterproof with siding of our own choice. The backyard we did landscaping and added a shed. Throughout the house and garage we added a ton of shelving.

The biggest value add we did was using this property as a house hack. Because this single family 3bd/2bth has two stories to it, we rent out the entire upstairs to other Army flight school students. Through this strategy, we maximize our return.

What was the outcome?

Living completely for free!

Lessons learned? Challenges?

The big piece that makes this house hack unique is doing it while married. Married with roommates is not for everyone nor every property. Finding the property and spouse that supports this strategy was a tough process, and I definitely made the right decision (on both) ;)

In the end, it all comes down to opportunity cost. Does the cost of having roommates while married outweigh the financial benefits of living for free? In our case, it was a yes, and we would definitely recommend it.