Today Bradley LaBrie shares his small multi-family house hacking story from Detroit, Michigan.
House Hacking Case Study
Bradley works for General Motors and is a real estate agent in the Detroit area. After looking at his expenses, Bradley decided that he wanted to pursue a housing strategy that would allow him to live for free. At the time, he was living in homes that he was flipping. With that, he decided to find a fixer-upper and live for free.
The House Hack
Bradley closed on this house hack in 2017. The small multi-family property marked his transition from flipping houses into a BRRRR house hacking strategy.
He found the off-market property and pursued a creative financing strategy to make this deal happen.
Updating the Units
Bradley made several major renovations to the house. Although he doesn’t have an exact figure, the costs of the renovation were fairly expensive. After updated the home, the property jumped in value from $110,000 to $184,000.
Once the property was ready for tenants, Bradley posted a listing to Facebook Marketplace. Typically, he is able to find tenants through this method quickly. At first, he used Cozy to help with tenant management. Now, he uses a property management company to handle tenant logistics.
The Numbers of the Deal
It’s time to find out exactly how profitable this house hacking strategy was!
Bradley used an unconventional strategy to obtain this property. When he found the property, the seller offered 0% financing with a $40,000 down payment. He secured the $40,000 through a private money loan for the down payment. While fixing up the place, he had an 8-month loan from the seller with no payments or interest due. After fixing up the property, he took out a conventional loan to buy out both the private money loan and the seller financing.
In the end, he did not have to put any money down on the conventional loan because he had increased the value of the property dramatically. At this point, his monthly principal, interest, insurance, and tax costs were $800 per month.
Bradley rented out one unit for $800 and lived in the other unit.
- Gross Rent: $800
- Mortgage payment: $800
- Cashflow before maintenance and vacancies: $0
- Total housing savings: $800
The cash flow of the property is breaking even. That allowed Bradley to live for free while building equity in a property.
The Learning Curve
Bradley was able to use the savings from this housing strategy to reinvest in more properties and save for the future. If you are interested in house hacking, he recommends, “Just do it. Less complication and more action.”
The Bottom Line
If you tackle the strategy of house hacking, you can completely transform your bottom line. What if you could live without a monthly housing expense? That saving could change your life.
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.