House Hacking Case Study 15 — FIbyREI

Dan is a manufacturing engineer for a NASCAR team in Charlotte, North Carolina. He started house hacking in 2017 and has since house hacked his way through three properties. With experience in roommate-style house hacking and small multi-family unit house hacking, he shares a unique story today.

House Hacking Case Study

The House Hack

Here is a look at his first townhouse:

After living at the first townhome for a year, Dan started looking for another property to house hack. The goal was to move into the next property to house hack and also rent out the entirety of his first townhouse. After searching for the right fit, he found a brand new duplex in Mooresville, NC which is slightly north of Charlotte. He purchased the duplex for $275,000. At this point, he went from no tenants to two tenants very quickly. He was able to rent out the second half of the duplex, his entire townhouse, and a room in his unit of the duplex.

Take a look at this duplex:

A year later, Dan decided to purchase a third townhouse to move into. The goal is to rent out one of the rooms to a long-term roommate and have the other room set up for traveling nurses or other short-term leases.

Updating the Units

The duplex was brand new, so it required no updates. But Dan did have to buy a washer and dryer for both units. He also installed an overhead oven range in one of the units for $125.

In the second townhouse, Dan plans to upgrade the kitchen countertops, remove a wall, and upgrade the lighting.

The Tenants

As a new manager of tenants, he uses Stessa to manage the finances and Google Sheets to track rent and expenses. But he plans to look into property management options on his units in the future.

The Numbers of the Deal

Financing

For the second townhouse, Dan used an FHA loan to purchase the property for $275,000. The loan had a 4% interest rate and required that he put down 5%. Overall, that lead to a monthly mortgage payment of $1,752 including principal, interest, taxes, and insurance.

For the final townhouse, Dan is using a conventional loan to purchase this property with an interest rate of 3.5%. The total monthly mortgage should be around $1,000.

Rental Income

We will take a look at the combined numbers from first townhouse and the duplex property since the third property is still under contract.

  • Monthly housing expenses before house hacking: $700
  • Gross Rent: $2,400 (townhouse + one side of the duplex)
  • Mortgage payment: $2,522
  • Cashflow before maintenance and vacancies: -122
  • Housing savings: 578

Although the cost of living in this area is relatively low, Dan is able to live for less than $150 per month. That is an extremely successful house hack. Not only is he house hacking, but also building his real estate portfolio at the same time!

The Learning Curve

Looking back, he would have used a conventional loan for the duplex. The upfront cost might have been lower but the PMI over the lifetime of the loan will get expensive.

Overall, Dan highly recommends house hacking to everyone. With some planning, many could save a lot of money over the years.

Get In Touch

The Bottom Line

If you are interested in creating your own house hacking story, then check out our ultimate guide, listen to our house hacking podcast, or read more case studies for inspiration. You never know how dramatically your life can change through this one choice!

If you choose to pursue a house hack of your own, then please share your story with us! We would love to showcase your success.

Originally published at https://fibyrei.com on June 24, 2020.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store