All Forum Posts by: Justin Albrecht

Hi All, 

I own 3 small multifamily properties in Kalamazoo, Mi. 2 of them have been house hacks and i'd like to continue using this strategy for all it's benefits. I'm curious if i could partner with my sister so she could potentially get into a yearly house hack too. 

Here are the key points of my thinking:

-Gift down payment funds to my sister so that she could buy a 2,3 or 4 unit home as a primary residence. She is a server, makes roughly ~30k per year and does not have much in savings. 

-My sister would buy property under her name and live in one of the units for at least 12 months. 

-I would manage the renovations, maintenance and tenants as I currently do with my own units. 

- Sometime after closing, sign documents to finalize 50/50 or similar % split ownership.

As of now I think this scenario could be win-win for both of us. I could help my sister purchase her first home with zero dollars out of pocket, she'd build equity and eventually split cash flow when she moves out. For myself, i can get into 50% of a new property by leveraging extremely low money down, my sister (should be) an easy partner/tenant to manage, she'll care for the property while she lives there, and it would allow me to purchase more than 1 property per year if I'm trying to only leverage primary residence loans/house hack.

In my market it's fairly easy to find a 2-4 unit home that hits the 1% rule (even at 5% down) and for a total cost of 100-200k. My sister currently rents one of my units so we are already in a similar arrangement. Goal is long term buy and hold. 

Would a partnership of this sorts be legal? Has anyone done something like this before and had success?

Thanks for the time!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $289,000
Cash invested: $16,000

My third property and second house hack!
FINALLY! a turnkey property that doesn't add a years' worth of projects to my schedule :) This is an amazing and very unique three-unit home in Kalamazoo's historic neighborhood.
Looking forward to living cheaply and building equity for the long term!

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

Low maintenance, low money down, above the 1% rule and my second house hack!

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

Good old-fashioned Zillow!

How did you finance this deal?

conventional primary residence loan.
negotiated seller credits
I complain about my W2 job... but in the end it funds all of my deals!

How did you add value to the deal?

rents are under market value from long term tenants. This home already meets the 1% rule as is... but once rents are raised to market value we will be making about $400 cash flow per month

What was the outcome?

A unique, long term investment opportunity that is (hopefully) low maintenance.

Lessons learned? Challenges?

Working with a great Realtor is key. We were super quick to view and make an offer on this home and that was why we closed on this home.

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

yes! Logan Laperriere!

I met Logan on Bigger Pockets and he was awesome to work with. Reach out to Logan if you are looking for an investor savvy realtor in the Grand Rapids or Kalamazoo area! Find him on Bigger Pockets!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $289,000
Cash invested: $16,000

My third property and second house hack!

FINALLY! a turnkey property that doesn't add a years' worth of projects to my schedule :) This is an amazing and very unique three-unit home in Kalamazoo's historic neighborhood. All units are spacious and well maintained by the previous owner that had owned the house for over 30 years.

Savvy with negotiations and the primary residence conventional loan made it so I only had to bring about $16,000 to the table in order to close.

Already exceeding the 1% rule as is with lower-than-average rents! Moving in myself I'll be living inexpensively for the next year until i can repeat the process.

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

Low maintenance, low money down, above the 1% rule and my second house hack!

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

Good old-fashioned Zillow!

How did you finance this deal?

conventional primary residence loan.
negotiated seller credits
I complain about my W2 job... but in the end it funds all of my deals!

How did you add value to the deal?

rents are under market value from long term tenants. This home already meets the 1% rule as is... but once rents are raised to market value we will be making about $400 cash flow per month

What was the outcome?

A unique, long term investment opportunity that is (hopefully) low maintenance.

Lessons learned? Challenges?

Working with a great Realtor is key. We were super quick to view and make an offer on this home and that was why we closed on this home.

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

yes! Logan Laperriere!

I met Logan on Bigger Pockets and he was awesome to work with. Reach out to Logan if you are looking for an investor savvy realtor in the Grand Rapids or Kalamazoo area! Find him on Bigger Pockets!

Hey Kevin, nice work buying a primary residence on a double lot! Looking for the value add features like the 2nd lot give you options and flexibility in the years to come. I bought my first rental duplex and one very important feature was that it came with a 2nd lot i could build on in the future or sell if i needed more cash during the renovations. I haven't done so yet, but it's a good card to keep up your sleeve for when you are ready. 

I like what Wayne said, look up the zoning laws and get in touch with the city to see if you could build without splitting the lots. I believe new construction loans typically require a 20% down payment so you'll likely need more cash on hand than buying a primary residence. I'm not 100% sure on that, but you can call around to lenders to start planning. Best of luck!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $125,000
Cash invested: $37,000

The first true investment property!

Fixer upper Duplex home that needed a complete gut job renovation.  I've been doing most of the renovations myself so it's been a slow process, but my sister has moved into the lower unit 2 days after closing and is covering a majority of the mortgage while helping me fix up the place. When I get both units completely renovated I'll be making twice as much as the mortgage + expenses. I expect to be fully rented by February 2024.

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

I wasn't planning on buying another investment property so soon, but this house came back on the market after a deal backed out. I called the realtor being more curious than serious. The house had tons of potential PLUS and extra lot included next door that added some security to the purchase. My sister moved in same weekend after closing and has covered 80% of the mortgage and helping with the smaller projects.

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

MLS, Zillow

How did you finance this deal?

person savings for the 20% down payment, Conventional 30yr fixed on the rest

How did you add value to the deal?

complete modern renovations of both units with the mindset to use property as a cash flowing rental.

What was the outcome?

currently in renovations stage still, but the minimal risk with sister moving in right away plus extra lot included in sale made this a low risk opportunity.

Lessons learned? Challenges?

contractors do not always have the experience they say do
Learning how to budget repair/rehab costs is difficult.
I need to start delegating smaller maintenance items

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $256,000
Cash invested: $40,000

The first one!

A 4-unit home in the historic neighborhood of Kalamazoo, MI. A cosmetic fixer upper also being used as my primary residence.

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

The market on a single-family home in Dec. 2022 was viewed as too competitive. I began looking at multifamily homes to subsidize expenses knowing i could do some of the repairs myself as a hobby after work.

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

Found on the MLS after months of searching. Zillow

How did you finance this deal?

FHA 203k loan (wow this was a long process)

How did you add value to the deal?

Each unit was outdated and "half-fixed". Living in one unit i started renovations there and have slowly moved to other units as i can. Doing most of the work myself it's a slow process.

What was the outcome?

Extremely low cost of living but much more time involvement for repairs than expected.

Lessons learned? Challenges?

contractors are expensive.
I can usually do it myself if i can find the time
Still learning how to delegate tasks/projects/maintenance
This process can work!