The Second “House-Hack” by Austin Hendrickson
This year’s market in the Twin Cities has been extremely competitive, especially over the summer. I still did several deals this year and am now looking for my next house-hack. I touched on the benefits of a house-hack in a previous blog post and explained the benefits. While looking for the ideal house I initially thought multi-family would be my best bed. However, after crunching numbers and comparing duplexes and four-plexes to single family houses, the numbers made the most sense in favor of single-family. Take note that I am not married and do not have kids so complete privacy is not a big issue for me.
After looking at houses with a minimum of four bedrooms and two bathrooms I made offers on two houses listed on the MLS. The winter market has really slowed buying activity so offers are now being considered under list price and much lower offers are being accepted as compared to summer prices – one big reason to buy in the winter season. I found a house about two miles from my current house – it is a turn-key 4/2 with an oversized two car garage. There is a large bedroom and living area on the upper level, two bedrooms on the main level and a bedroom, common room and bathroom in the basement. The house was initially listed at $225k and was eventually dropped to $200k. I offered at $189k but had another buyer come in and lock it up for $198k. At that point I told the realtor congratulations and proceeded to look for other houses.
About a week later the realtor contacted me and let me know the current buyer had backed out as they were a first-time home buyer and got cold feet. I countered at $190k and the seller later agreed to $197k with $5,500 of seller paid closing costs for $191,500. I was waiting on direct mail responses to come back from mailers I had sent out the same week but I liked the price so I signed the PA. In past talks with my lenders I knew I could get the house for 3% down (conventional loan), which is about $6k for a down payment. I am also a realtor so my commission on the sale is projected to be a little over $5k. With the seller covering most of my closing costs I will be into the house with essentially no money down (or maybe a couple thousand dollars) – this is huge. I plan on living in the basement and renting out the other rooms. I will about break even after all expenses (including capex, vacancy, etc.), however I will also rent out my current bedroom in the house I am living at now so will end up cash-flowing about $500 a month. An extra $500 a month and another turn-key property for a few thousand dollars down is a no-brainer at this point in my investing career. Assuming no issues arise during with financing or the inspection this will be another great stepping stone towards financial freedom!
Austin is a young motivated investor currently residing in the Twin Cities market of Minnesota. He grew up in a large family in rural MN, and at age 19 obtained his bachelor’s degree in Accounting from St. Cloud State University. Austin is a full time CPA who spent several years in St. Cloud befor See more >>
Austin is a young motivated investor currently residing in the Twin Cities market of Minnesota. He grew up in a large family in rural MN, and at age 19 obtained his bachelor’s degree in Accounting from St. Cloud State University. Austin is a full time CPA who spent several years in St. Cloud before spending the last few years working in downtown Minneapolis for a large professional services firm where he specializes in construction and real estate audit and tax. He has worked with everyone from investors with one or two properties to large commercial investors with millions in real estate. Austin first became interested in real estate after reading the book Rich Dad Poor Dad at age 22 and realized that most of his wealthy clients were in real estate as well. He bought his first house soon after and six months later he started Adjacent Properties LLC, a real estate investing company, which has taken off. Somewhere along the way he also obtained his real estate license and is a licensed realtor in Minnesota. He has experience with flips, buy and holds and wholesale deals in multiple different states. See less >>