Ever since my first post last fall, I have been on the lookout for ideal “house hacking” properties. As it turns out, it’s pretty difficult to find a good deal here in Provo–at least with traditional methods like the MLS. For an idea of what an “untraditional method” is, check out this list on Biggerpockets.
This week my wife and I got pretty excited to find a house with an accessory apartment for $155,000–about $40,000 less than comparable properties. (To automatically get properties that fit your criteria sent to your inbox, contact any realtor and they’ll set it up for you).
After learning that they would consider seller financing, we set up a showing for the same day. It exceeded our expectations. The kitchen was nice (a selling point for my wife) and the accessory apartment (which was actually detached from the house) was very cozy. We learned that the tenants were paying a cheap price for rent, indicating to us that we could raise it and make some cash flow.
We went home and worked out the numbers. Here is a picture of a very quick analysis:
I learned this from Biggerpockets. Although it’s not the best investment, these numbers were great for us. (We are less concerned with cash flow and more concerned with building equity instead of paying someone else’s mortgage)
You can read more about analyzing deals here and here.
We went home, talked about it, and decided that we should make an offer. Our realtor, who is awesome (let me know if you need one in Utah), checked the property’s zoning info with the city and found out that the accessory apartment was not legal and that the tenants were being kicked out because the owner wasn’t allowed to rent out that apartment in the back.
We were bummed; it was such a great deal. Many people would take the house anyway and try to fly under the city’s radar, but we couldn’t risk that as first time home buyers.
At least we got some more practice at analyzing deals. We’ll keep looking!