Brendan put his skills as a real estate analyst to good use for his house hacking endeavor. He has been able to successfully house hack twice in two multifamily unit properties in Cleveland, Ohio. We will find out more about his house hacking journey today.
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House Hacking Case Study
Before Brendan heard about the idea of house hacking, he was renting a room near a college campus for $300 per month. After learning about the possibility of reducing his housing cost, he was intrigued and learned more through popular podcasts. He first attempted to buy a house near the University of Akron campus while in school, but the deal fell through because he was unable to secure financing.
Two years later, Brendan decided to partner with a lifelong best friend to secure financing for a house hack.
The House Hack
In 2019, Brendan was able to purchase a duplex with his best friend in Ohio. After successfully updating the property, they decided to purchase a second duplex in a different part of town. In both of the house hacks, they had to put some time and money into renovations. However, they were able to rent out the extra units for a profit relatively quickly.
Updating the Units
The duplex that Brendan bought in 2019 needed some major repairs. He and his friend installed new vinyl flooring, trim, interior doors, a kitchen faucet and repainted all the walls. The biggest expense was the replacement of a 40-year-old furnace for $10,000.
The second duplex that Brendan bought was in better shape. However, there were still some updates that needed to be done. The major adjustment was opening up a wall between the kitchen and dining nook. Plus, framing an existing living room to become a bedroom. With a few more rearrangements in the unit, they were able to maximize the number of bedrooms in the units. These renovations took very little time to implement and cost around $3,000.
After properties were updated, Brendan sought out tenants with Zillow Rental manager and Facebook Marketplace.
The tenants are easily managed with the help of Cozy.
The Numbers of the Deal
It's time to find out exactly how profitable this house hacking strategy was!
For the first duplex, the purchase price was $113,000. Brendan and his friends used an FHA loan to put 3.5% down on a loan with an interest rate of 4.875%. The total monthly mortgage for the property was $851 per month including principal, interest, taxes, and insurance.
For the second duplex, the purchase price was $146,000. Brendan and his friend put 5% down on a conventional loan with an interest rate of 4.675%. The total monthly mortgage for the property is $971 per month including principal, interest, taxes, and insurance.
The properties each brought in a significant amount in rent each month to offset the housing costs of Brendan and his friend.
Let's take a closer look at these numbers for the first duplex:
- Monthly housing expenses before house hacking: $300
- Gross Rent: $1,100
- Mortgage payment: $851
- Cashflow before maintenance and vacancies: $300
- Housing savings: $600
Let's take a closer look at these numbers for the second duplex:
- Gross Rent: $900
- Mortgage payment: $971
- Cashflow before maintenance and vacancies: -$71
- Housing savings: $529
The house hacking experience was profitable for Brendan and his friend. They plan to use their savings to continue building a real estate portfolio.
Want to dramatically reduce your housing costs while building equity in a property? Dive into housing hacking with our House Hacking Quick Start Guide.
The Learning Curve
Brendan and his friend have enjoyed the benefits of house hacking. In fact, they plan to start shopping for another duplex at the end of 2020! He would recommend trying out this strategy to build your own real estate portfolio.
Looking back, Brendan wishes that they had bought a 3 or 4 unit property. However, they may be able to tackle that dream in the future!
Get In Touch
If you'd like to find out more about Brendan's story, then connect with him on Twitter or Instagram @brendanqbennett.
The Bottom Line
Brendan loves real estate and the power of house hacking. It is a profitable strategy for anyone interested in offsetting their housing costs.
Be sure to check out next week's house hacking case study featuring Mike!
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.
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