This case study was discussed in the February Monthly Roundup podcast.
Property Details:
- 4 Bedroom
- 3 Bathroom
- Sold Price: $382,000
This house presented itself as a great buying opportunity. The seller initially overpriced the home and as it sat on the market, they started dropping the price. It went under contract with another buyer but we followed up with the listing agent in case it fell through. Sure enough, it did!
The seller ended up accepting our offer even though it was slightly lower than the offer that was under contract because they knew we could close. That shows the power of having a lender who has a good reputation with other agents. The seller wanted to sell the house “as-is”. We got the inspection and found a few things that we would not have seen without the inspection and went back to the seller for some considerations. The home had an addition put onto it that did not have the HVAC ductwork to it and there were high levels of radon. In the end, we got about $1200 to get a radon system installed in the house. It never hurts to ask!
*These figures are slightly off, buyer put down 10%, not 5%.
At first glance one see’s a negative $5,311 cash flow, but with house hacking these work sheets don’t tell the whole story. You have to live somewhere, and this buyer gets to live for about $450 per month. They also get the benefits of building equity in a home and the tax advantages of owning a home.
$2,000 per month is a very conservative estimate for rental income for this home as well. That is only $633 per room, individual rooms in Denver are renting closer to $800 plus. It’s not unusual to see rooms of $1,000 in popular neighborhoods. While it is more work to rent on a room by room basis it does provide house hackers with the most cash flow. As the new owner works to improve the livability of the house they should be able to increase the rents for the rooms and essentially live for free.
