Today Willie Mandrell shares his house hacking story that centers around a multi-family property in Boston.

House Hacking Case Study

Before Willie heard of house hacking, he was living at his parents’ home in Boston. Once he discovered the idea of house hacking, he was immediately intrigued. He decided to read The Millionaire Real Estate Investor by Gary Keller to learn everything he needed to know. After arming himself with the right knowledge, Willie embarked on his house hacking adventure in 2012.

The House Hack

The property that Willie bought in Boston was a three-story building. Each of the floors was a separate unit. After closing on the property, Willie moved into the ground floor unit with his wife and rented the other two units. Additionally, they rented out a room in their unit to a friend to further increase the profitability of this house hack.

Here is a closer look at the house:

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Before

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After

Updating the Units

When Willie bought the property, it needed a variety of repairs. Although he did not start any major renovations from the start, he has put over $100,000 into maintaining and updating the building. The vast majority of these repairs were funded by the tenants’ rent and a cash-out refinance loan.

The Tenants

Willie was able to find tenants to fill his property very quickly through Craigslist. However, he would not recommend that strategy for the future. Instead, he recommends using an agent to find suitable tenants.

In the beginning, Willie set up an Excel and whiteboard system to manage his tenants. After building a real estate portfolio to 40 units, he still uses the same system.

The Numbers of the Deal

It’s time to find out exactly how profitable this house hacking strategy was!

Financing

The purchase price of the three family property was $390,000. Willie was able to take advantage of FHA financing. With that, he only had to put 5% down at the time. After closing, his monthly mortgage was approximately $2,850 which included principal, interest, taxes, and insurance.

Rental Income

The two units in the building each rented $1,500 per month. Plus, Willie’s friend paid $600 for a room in the ground floor unit. Overall, that led to $3,600 in rent collected each month.

  • Monthly housing expenses before house hacking: $0
  • Gross Rent: $3,600
  • Mortgage payment: $2,850
  • Cashflow before maintenance and vacancies: $750
  • Housing savings: $750

The rental income outweighed the mortgage each month with some wiggle room for vacancies. Plus, Willie and his wife were able to live in one of the units for free. It was a very profitable house hack for Willie. He was able to use the money to pay off his student loans and fund his wedding. In fact, he claims this was the best investment he has ever made.

The Learning Curve

Looking back, Willie would have still embarked on his house hacking adventure. His only wish is that he had been able to get more creative with financing to get more deals done. Although he would repeat the same deal, he would likely not choose to house hack now. After living there for a few years, he and his wife bought a single-family home and plan to stay there for a long time.

Get In Touch

If you are interested in Willie’s story and want to connect, then check out his website — Mandrell Co. Or follow him on Facebook @WMandrell, Instagram @realwealthbuilders, or LinkedIn @wjmandrell.

The Bottom Line

Willie recommends getting started in real estate in any way possible. He shares, “if you want to build true wealth, build rental real estate.” It could be the solution to reaching your FI goals.

Be sure to check out next week’s house hack case study with Valery from The Dainty Dollar.

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.