House Hacking

[malacca]

Anyone House Hacking?

I am about to close on a 4-plex. It is a newer and nicer building in higher-end neighborhood.

Well, it is a 'twin home' at the moment - but the walkouts are actually a separate unit with its own kitchen, etc. The previous owner lived in one side and rented out the other (as one unit instead of two). He also had some retired friends staying in his side's lower unit. He moved to a retirement home and is selling the place.

One side's current rent almost covers PITI (shy by $200) but is underpriced.

But if I split into two units it would be CFP by $1000+.

So the house is just a down payment for me - and $800 in my pocket.

Now, if we decide to rent out the lower unit on our side that would bring in another $2100. We will have to see if the wife wants $2100 or more space!

And will sell the other house we own in the spring. So will have a lot of cash on hand.

Gosh, we haven't paid for a house since I had a very expensive place in Seoul and sold it in 2015!

[ThatGuy]

Have you ever owned rental properties before?  I never have but they always seem better on paper than they are IRL.  A lot seems like it can and will go wrong. 

[malacca]

Yes, I have a bunch of rentals currently. All doing very well.

You have to be very disciplined. You can't lower your standards and take risky tenants just because a unit is empty or they have cash in hand.

[Chris Pascale]

Great job, very cool. Wish I could give you some advice, but am really just bumping this up for others to see.

I have just a single family rental that I bought in Oct., 2007. As a result of it not cash flowing positive after 2009, I did not pursue more properties, but did re-fi to a much better rate on a 15-year in 2012. Then last year it flooded in Hurricane Florence, and is now on the market all shiny and new.

WAIT!!!! I do have advice.

Buy Flood Insurance. Not in a flood zone? Read this short insurance piece I wrote - https://oldpodcast.com/optimal-insurance-life/

[robartsd]

Buy Flood Insurance. Not in a flood zone? Read this short insurance piece I wrote - https://oldpodcast.com/optimal-insurance-life/

The thing I find most interesting about that article is the difference in the payout process for homeowner's insurance vs. flood insurance.

[Chris Pascale]

Buy Flood Insurance. Not in a flood zone? Read this short insurance piece I wrote - https://oldpodcast.com/optimal-insurance-life/

The thing I find most interesting about that article is the difference in the payout process for homeowner's insurance vs. flood insurance.

The flood policy paid out immediately, and then they went back in and said "we never paid you for the fireplace and HVAC."

The regular policy pays after the fact, and they have generally made me submit the request with additional information, well after the work has been done. It makes me feel very sorry for people who don't know it's okay to ask for something over and over again until they get what they deserve.