Hey there, This is Everything House Hacking. We will make you more knowledgeable about real estate investing in less than 5 minutes, twice a week!
In today’s Episode:
🛠 Livin & Flippin
🌊 RI Compound
🏚 Renting is getting tough
Now, let’s dive in.
Lesson
Live in Flips
Traditional house hacking methods may not be “edgy” enough for those who like to go against the grain.
Are you a hipster, or maybe just “unconventional”?
Many Savvy investors have successfully practiced the House Hacking strategy called a “live-in-flip”. This can sometimes be done by investors unintentionally, and entails making repairs or improvements to a property while you’re living there.
It’s easy to make the assumption when you hear “flip” to envision a fully gutted property being redone from the ground up (thanks HGTV). In reality, utilizing the live-in-flip method looks more like making renovations one at a time, and can even be cosmetics only. Improvements are generally associated with a little sweat equity, where you work on the property yourself instead of hiring contractors. Imagine working from home or getting done with work and being able to make improvements that increase the value in your property! Though this is the common way to “live-in flip” successfully,It’s also very possible to still be profitable if you were to hire a contractor.
This is the beauty of live-in-flips. When you’re done getting dirty, you can likely sell the property for a profit, or (preferably), hold onto it, rent it out, and move onto the next property!
Big Picture: This method is something that can be repeated, and may even get easier after all the lessons you learn on your first go-around. Not a bad way to build a portfolio.
Deal Analysis
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If there’s two separate structures on one property it may automatically be qualified to be called a “compound”. That alone makes this deal good in our books. Imagine being able to call your friends up and say “Hey, swing by the compound”.
JK (a little bit).
As the supply of multi-families in the capital and other desirable cities has dropped, the ocean state investors who like to stay close to home are considering this town that hosts the state’s only major airport.
Market rents vary in this area, from $1650 - $1750 for a two bed, one bath like the second unit on the property. However, us house hackers are willing to sacrifice a little comfort for more cash flow and would rent out the “main house” that is 4 beds, 1 bath for $1950 (conservatively).
Our Final Thoughts: We dig the fact that there are two different structures and the living situation may be more comfortable, but this can sometimes lead to twice the capex. You’re living below market rent, but at a slim margin.
Related News
Honestly… at $1450 we might consider a little Airbnb Arbitrage with that shack.
But for real, It’s a bad time to be a renter.
According to Yardi Matrix, the average asking price for a new lease in a multifamily increased 14.3% year over year to $1,659 in April. Additionally, rents for single-family homes increased 13.2 percent to $2,018.
As is the same with the prices to buy a home (and every other economic factor), this is a result of low supply and high demand. It has been especially difficult to buy a home over the past few years, and most winning offers include steep bids over asking prices. As a result, many consumers are turning to renting instead of buying. This of course, is making the rental market equally as competitive as purchasing a home.
Big Picture: Soaring inflation and limited supply impacts all consumers, landlords and renters alike. However, House Hackers generally have the upper hand in conditions like this, where a fixed mortgage rate provides more predictability of housing expenses.
Interesting Stuff
Book: The Millionaire Real Estate Investor
Quote: “The only bad time to buy a property is later” - Steve Bolton
Video: Easiest home improvements that will increase the value of your property
Closing Time…
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