All Forum Posts by: Devin Dang

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $267,500
Cash invested: $50,000

House hacking this single-family home in Northeast Austin! A 4 bed/2 bath that I'm living in one of the rooms and renting out to other three to completely cover PITI + extra $478/cashflow monthly. When I move out to my 2nd house hack, this will easily cash flow $1000+/month. In addition, I put in roughly ~23k into renovations and this property is now worth 400k, creating close to 150k in equity through forced and natural appreciation.

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

Ability to live for free and own real estate in one of the fastest appreciating markets in the US

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

Right off the MLS during a record low inventory levels, sitting close 0.2 months of inventory by the time I closed

How did you finance this deal?

Conventional 3% loan. Due to unprecedented appreciation, appraisal came in low, had to come in with a partial appraisal waiver and come in with an extra 20k to close up the deal but the appreciation alone since has made it worth it!

How did you add value to the deal?

Full cosmetic rehab: interior/exterior paint, paint kitchen and bathroom cabinets, LVP flooring throughout, and updated lighting fixtures

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

Agent team: The Jordan Moorhead Team in Austin Texas
Lender: Tyler Hodgson with NXT Mortgage

Thanks everyone so much for your replies and great advice. This was super helpful and overall helped be better understand my goals and product type. I decided I will no longer be moving forward with a house at this price range since it does not make the most sense more my goals long term. 

@Robert Eyers Appreciate the advice, I'll definitely keep everything in mind.

@Jordan Moorhead Wow, with such low supply of inventory in Austin I expected the number of offers to be way higher. Looking forward to learning more about your east austin SF home w/ an ADU! As for the numbers once I move out, I don't feel comfortable continuing to rent by the room with separate leases and constantly having new people in and out (of which may not know one another). I'd like to rent out to a family/group that knows one another and assume the rent I could charge would be less than $2350, esp if its a single lease. But I have no idea if this assumption is correct, could use BPs help to more accurately determine a realistic rent if I'm not occupying the property.

@Beau Fannon Hey thanks Beau, what are all of the line items that I am missing?  

Thats awesome, I would love to get in the BRRR strategy in the future Would you be able to share any addresses of previous duplexes (doesn't have to be one of your personal investments) that you've seen in North Austin that I can look at? I'm trying to set my expectations of what duplexes typically look like in austin (location, price, condition, ect).

Hi Allison, appreciate the comment. Yes, I have MLS alerts set up in this area! Here are two homes in that area that come very close to my criteria: 2105 Arborside Ln pending at 289k and floor plan "The Newhaven" by D.R. are under contract (https://www.drhorton.com/-/media/DRHorton/ProductCatalog/270-Austin/27150-Pioneer-Hill/271510000-Pioneer-Hill-35-RL/1854/The_Newhaven_1854_AB_Horton_1853SF_PIONEERHILL_UE.ashx.) per the MLS for mid 280k. 

Would love to get second look over my assumptions, challenge/reveal any flaws in my current plan, and listen to any suggestions to successfully house hack in Austin, TX.

Main Goal: House hack to live for free, cash-flow ~$150-200, have the ability to cash flow some after I plan to move out in a few years.

My situation: Newbie and aspiring real estate investor looking to purchase my first deal at the end of 2020 (Ideally November/December). Just hoarding cash right now to utilize a low 3.5% FHA downpayment. Checked with a local lender and got pre-qualified for a 299k loan (not sure how high my buying power truly is, I just entered that number in the application). I'd love to do the typical multi-family 2-4 unit strategy but don't think it's going to work out for me if I want to be in this market. So I ran the numbers (see below) for house hacking by the room in a 4/3+ SF home and seems to work for me. Given this strategy, the numbers actually work out for a lot of deals but that doesn't mean its right for me. I understand that there shouldn't be any emotion in an investment but since this will be my primary residence that I live in with my girlfriend and three roommates (two of which are my current roommates that I rent with and prefer to stay with). I am trying to find the right balance between something we want to live in and being a smart buy and hold investment.

I'm going to be a new investor and with no knowledge of construction, I was thinking that I'd want my first deal to be a newer home (2010+) so I can cash flow from move-in, low cap ex reserves to put away, and justify the rents to my roommates to move farther from the city than we are used to. Of course, I plan for the majority of my other deals to be value-add opportunity homes with a rehab budget but my main goal is to get started and eliminate my housing cost right now.

Location - Love this pocket in North Austin that's close enough to the city but relatively affordable:

Rent Assumptions in a 4/3:

• - Room #1 w/ personal bathroom: $700
• - Room #2 w/ shared bathroom: $600
  
• - Room #3 w/ shared bathroom: $600
  
• - Girlfriend sharing master bedroom w/ me: $450
  

Total rent = $2350

Deal Analysis on a 280k home:

Questions:

• (1) Although $127/month doesn't seem too great, with the low down payment I'm seeing 9.9% return not to mention my current rent savings if included would mean 62%/year return while I'm living in it. What I'm worried about is if I can't get it to cash flow when move out in 2-3 years. Any thoughts advice from the community here?
• (2) Are there any other house hacking strategies that others  have found successful in the past year or so in this market?
• (3) Any assumptions I'm missing/wrong on my analysis (excluding utilities and HOA)?
• (4) Feel free to leave any other thoughts, comments, or suggestions. 
  
  
  

Count me in! I'll be there

Thanks for the warm welcome everyone!