Hey, I wanted to share something interesting that just hit the market – this duplex in New Glarus at 100-102 Grossenbacher Lane. It’s been catching my eye as a potential house-hack deal, and I wanted to walk you through the numbers to see if it makes sense.
Here’s What We’re Looking At
This is a rare find in Green County: a two-acre property with a 3,744 sq ft duplex built in ’92. One side has two bedrooms, the other has four. Both units have open layouts, private decks, and multiple bathrooms. The ask is $749,000.
I know that number might make you wince. Stick with me.
The FHA Question
First question you’re probably asking: “Can I use an FHA loan?”
Short answer: No.
The FHA loan limit for a 2-unit property in Wisconsin is $671,200. This property is asking $749,000, which puts it $77,800 over the limit. You’d need to either come up with that difference as additional down payment on an FHA loan, or go conventional.
So let’s look at conventional financing.
The Real Numbers (5% Down Conventional)
Here’s what the monthly payment would look like with a 5% down conventional loan at today’s rates:
Purchase Details:
- Purchase Price: $749,000
- Down Payment (5%): $37,450
- Loan Amount: $711,550
- Interest Rate: 6.3%
Monthly Payment Breakdown:
- Principal & Interest: $4,404
- Property Taxes (current): $867
- Homeowners Insurance: $192
- PMI: $445
- TOTAL: $5,907/month
Important Note on Taxes: The current property taxes are $10,399/year. However, when this property sells at $749k, it will likely be reassessed. Green County’s effective rate is around 2%, which would push taxes to roughly $1,248/month ($14,980/year). Budget for the higher number to be safe – that would bring your total payment to $6,289/month.
Here’s Where It Gets Interesting
Let’s say you live in the 2-bedroom unit and rent out the 4-bedroom for $1,339/month (conservative based on HUD Fair Market Rents for Green County).
Your net monthly out-of-pocket:
- With current taxes: $4,568/month
- With reassessed taxes: $4,950/month
Here’s what you’re getting:
- You’re building equity on a $749k property
- You’re living on two acres in New Glarus
- Your tenant is covering nearly $1,400 of your mortgage
- After PMI drops off (when you hit 20% equity), you save another $445/month
Who Is This Property Actually For?
This isn’t your typical house hack. Here are three scenarios where this deal actually makes a lot of sense:
Scenario 1: The 1031 Exchange Downsize
Maybe you’re selling a larger rental portfolio or a commercial property and need to 1031 exchange into something. This property checks a lot of boxes:
- Qualifies as like-kind property for your exchange
- You can live in one unit (making it your primary) while keeping rental income flowing
- The two acres give you flexibility for future use
- You’re deferring capital gains while upgrading your living situation
If you’re sitting on a property with $200k+ in gains, this move could save you $40k-60k in taxes while setting you up in a quality home.
Scenario 2: The High Income Earner
If you’re making $150k-$250k+ and getting hammered on taxes, rental real estate can provide tax benefits. But let’s be realistic about the numbers:
The Depreciation Math:
- Building value (roughly 75% of $749k): $562,000
- Annual depreciation (27.5 years): $20,400/year
- BUT – you can only depreciate the rental portion
- If you live in the 2BR and rent the 4BR, only about 50-60% is depreciable
- Actual depreciation benefit: $10,000-12,000/year
Tax Savings by Bracket:
- 24% bracket: $2,400-2,900/year ($200-240/month)
- 32% bracket: $3,200-3,800/year ($265-315/month)
Important Caveats:
- Passive loss limitations apply if you’re a high earner and not a real estate professional
- You’ll need to qualify under IRS rules to deduct these losses against W-2 income
- Property tax and mortgage interest are also deductible (on the rental portion)
- This is complex – talk to your CPA before assuming these benefits
The tax angle helps, but it’s not a magic bullet. You’re looking at a few hundred bucks a month in tax savings. Combined with the rental income offset, it makes the deal more palatable – but you still need the income to qualify and carry the payment.
Scenario 3: The Traditional House Hack (with realistic expectations)
This works if:
- You have household income of $130k+
- You value the two acres and New Glarus location
- You’re thinking 5-10 year hold minimum
- You can comfortably afford $4,500-5,000/month housing costs
This isn’t the deal where your tenant covers 80% of your payment. But you’re getting into a premium property with someone else helping you pay for it.
Is This Deal Right for You?
This makes sense if:
- You’re doing a 1031 exchange and need to park capital
- You’re a high earner looking for tax advantages through real estate
- You want to live in New Glarus with room to grow
- You see value in the two acres (future subdivide? hobby farm? privacy?)
- You can handle a potential property tax increase when it reassesses
This doesn’t make sense if:
- You need immediate cash flow
- You’re stretching to qualify
- You’re looking for traditional house-hack numbers where rent covers most of your payment
- You can’t afford the payment if taxes jump after reassessment
And As Always…
We can manage it for you. If you decide to pull the trigger on this property, Big Red Barn Properties can handle tenant placement, rent collection, maintenance coordination – the whole nine yards. You focus on building wealth, we’ll handle the day-to-day.
Bottom line: This is a premium property that works best for someone with a strategic reason to buy – whether that’s a 1031 exchange, tax planning, or long-term equity building in a desirable location. The house-hack angle helps offset costs, but this isn’t a beginner deal. And budget for higher taxes when it reassesses.
Questions? Want to run your specific situation or talk through a 1031? Hit me up – jeremy@bigredbarnrealestate.com.