Real Life Value Add

In my previous blog post, I wrote about creating deals. This technique is incredibly powerful and it is something that I will take advantage of in my investing journey. In this post, I am going to share a real life example of what I would do with a property to add value in order to increase revenue.

This property is an ideal value add property. With this property, I would house hack the upstairs and rent out the basement unit as a MTR.

Here is the layout of the property. There is a high likely hood that I would need to reconfigure the second entrance in order to separate it from the basement stairs to make the second unit.

This property would need a lot of cosmetic updating. In the upstairs, it would be mostly be paint, some new lighting, hardware for the kitchen, and some tile work for the bathroom. I would also change the breakfast room to a bedroom. After doing this, it would be ready to live in. I would live in one bedroom and rent out the other two.

The basement would need a little more work. To make it legal, I would need to add egress windows. For the rooms that would not have egress windows, I would be super interested in adding in some fake windows made from LED lights to give the basement a much better feel. This would make it much better to live in. Here is an example:

Here are some other pictures of the basement in its current condition:

I will need to paint the downstairs and update the bathroom.

The Numbers

With just the upstairs unit as a house hack, I would technically not be living for free. I would charge my two roommates $650 for each room and live in the other. Living here would cost me $468. This is not bad considering this is still cheaper than it would be to rent any place on my own. However, this is the entire picture of the property, there is still the basement unit to talk about. This unit would be rented for $1800 and cashflow roughly $1040. With this unit, the total cash flow for the property would be $578. This is a solid investment! After moving out of my room, I would rent the upstairs rental as an MTR as well and it would cash flow even more. This is the power of value add and I encourage everyone to take advantage of it.