Let’s breakdown a house hacking deal from a client in Coeur d’Alene, Idaho. These numbers are of January 2023….
Purchase price on the property was $450K. There are 3 beds/2 baths upstairs and 2 beds/1 bath downstairs. The buyer is planning a basic renovation in the basement to add a 3rd bedroom, kitchenette and 2 egress windows. They are budgeting $10-$15K for the updates.
But here’s where it gets good. I negotiated $12,500 in seller concessions. This gave my buyer the flexibility to have no closing costs, buy down their interest rate or have funds for the renovation!!
The client is going to rent out the bottom on Airbnb for $4K per month (according to AirDNA) and will be living in the nicer unit upstairs. When we look at deals with clients we always talk about comfortability vs. profitability and this client got both!
The PITI on the property is $3,000. I’m advising the client puts $500/month in reserves, but that means he’ll still cashflow $500/month WHILE LIVING FOR FREE!!!
In one year, he plans to move out – you can keep your residential interest rate, but switch to an income property after 365 days. When he moves out, he will long-term rent the upstairs unit at $1,800/month.
At this point his total rent will be $5,800/month. With $1,000/month set aside for utilities and reserves he’ll cashflow $1,800/month!
The annual cashflow will be $21,600. With an initial investment of $13,500 he’ll see a 160% cash on cash return. Pretty solid!
Oh, and he’ll all see the crazy appreciate that Coeur d’Alenes been seeing as well.
Just the numbers:
Purchase Price – $450k
Negotiated – $12,500 in concessions
Total Rent – $5,800
Mortgage – $3,000
Utilities + Reserves – $1,000
Cash Flow $1,800
Annual Cash Flow – $21,600
Initial Investment – $13,500
CoC Return – 160%