All Forum Posts by: Nick Riccio

@Christopher Grant I would say often times, people use a rehab loan (203K or conventional renovation product) to pull off something like this.

I've done it in the past via FHA and paying the renovations in cash, and then refinancing into a conventional.

I would make sure they understand what you're trying to do - that is the biggest piece

@Daniel Gonzalez you're spot on. when buying a house hack via low down payment program, you're going to need to buy it in your name. When just starting out (limited assets), there is not much need for an LLC anyways!

@Darien Terrell it's going to be difficult to get a low down payment on a multi family with a conventional loan. Not to say you couldn't find a local bank to do it - but I doubt it. 

FHA is the most common option. I help a lot of buyers with it as well as do it myself. You want to be aware of the self-sufficiency rule if you're looking for a 3-4 unit. Also, if it's in rough condition (chipping paint, no utilities working, etc. ) it might be hard to pass FHA inspection. If that's the case, and you still want to make the deal work, you can always fix what needs to be before you close!

Hey @Joshua Fabian awesome job on getting started! I would agree that multi family property prices have not reflected the current rental market risk. I would say, I think a lot of that is mitigated when you are house hacking - so it might be a great time to get started, especially in NY. 

As far as being an agent, I would only pursue that if it's a passion of yours. If not, I'd rely on an expert that commits themselves to it on a daily basis!

Great insight here. I love the idea of Worcester - although it certainly is getting its legs and becoming very hot. I've invested in Boston and have great returns - although value add is a must in order to get strong returns.

Looking forward to hearing more about you guys getting started!

Investment Info:

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

Purchase price: $840,000
Cash invested: $185,000

Purchased a two family with 5% down FHA. Purchased as a 4 bedroom 2 bathroom. Converted to a 7 bedroom and 4 bath two family as we expanded one unit into the basement. Just appraised at $1.375M. One unit currently rents for $6,000/month and our unit (when moved out) should rent for ~$3,200.

Total rent roll should be ~$9,200

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

Major value-add opportunity. Were able to add additional living space to the basement!

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

This was on MLS. Listed for almost $100K over what we ended up paying.

How did you finance this deal?

We financed this with an FHA loan 5% down. Had to complete a couple of repairs prior to close due to FHA requirements. Seller let us go in and complete the repairs so that we could close!

How did you add value to the deal?

Added 3 bedrooms and a bathroom to the basement. Added an additional bathroom in the second unit. Total add of 3 beds and 2 baths and about ~900 square feet of living space

What was the outcome?

Added about $500K in equity. Took the expected rent from ~$2,400 to $6,000 per month!

Lessons learned? Challenges?

This was a large project and during covid made it even more difficult (of course was out of our control).

Adding space to basements can be tricky, had certain window requirements and egress requirements we needed to meet.

Awesome @Cory Dill! Glad to see you're looking to get into house hacking, it's by far the best way to get started investing!

Both @Will Fraser and @Karl McGarvey nailed it, so I don't have much to add. I'd just reiterate it's important to build your team with folks that are doing or at least understand what you're trying to do!

@Raphael Abreu I couldn’t agree more. I talk about this a lot as well and have been house hacking in Boston since 2018.

My first house hack I bought for $630k and I broke even while living there, and now cash flows nicely!

My second house hack I make ~$700 while living there, and will cash flow very well when I leave!

On top of that - I would be spending around $2k in rent each month if I was renting.

It’s certainly “harder” to get started in expensive markets - but it’s life changing!

Are you looking to buy another investment property? You just can't use another FHA until you refinance out of your current FHA loan.

@Jarrod Kohl I would focus on the best deal, personally. I believe the temporary rental market pain will be relatively short-lived. We all know Boston is a tremendous long-term play and especially as a house-hack, if you can make it work with offsetting your living expenses, understanding the market will come back, I don't see why you wouldn't explore it.

With that being said, this is under the thought that this is a "good" deal in your business. Hope this helps.