Rental House #15 – Another Duplex Added to the Portfolio
8/2014
2350 Sauntering Sunlamp – Duplex #2
As soon as we got House #14 locked down, we were all ready to go on a second duplex nearby. We found this property through our yellow letters yet again. These letters are making us so much money! Somehow, those little yellow letters allow us to buy property at a significant discount continually.
Rental House Details
The duplex again was half of an entire duplex, as each half is separately addressed here where we live. House #14 was the left side, now this property in the right side of a duplex. This house was larger than the previous duplex, as it was three bedrooms, two baths, and 1220 square feet. This one needed some work, so we repainted it all and replaced the floors and appliances as well. These duplexes also do not have garages, just a driveway.
Finances
We luckily got this home under contract for $53,000 ($55,500 with $1,500 back at closing). We financed $44,400 or 80% with our favorite local bank once again, which meant we needed to bring about $9,500 to closing with additional costs. We then found a renter for $860 a month—a solid 1.5-1.6ish on rent to purchase price. Phenomenal deal.
For whatever reason, these two duplexes we’ve purchased show well in terms of cash flow but where they are terrible in the appreciation department. They are pretty run-down neighborhoods, built worse than our standard brick houses, and they don’t have garages. Subsequently, we get a little lower quality tenant.
Storytime
The renter at this place lost his job during the oil downturn, and he couldn’t pay. We worked with him, but eventually, they needed to move. He left a broken-down engine in the driveway. It was a mess, oil everywhere. However, the best part was that about two months later, we learned he got fined for illegal dumping as the cops found a ton of garbage in a field somewhere, and there were docs in it with his name and address on it. Sucka! So yes, the tenant quality for these duplexes seems to be a bit lower than what we have in our previous properties. Nevertheless, It’s hard to pass the fantastic cash flow they provide.
Rental House Pictures
Sad pics I know…( We hadn’t hired a photographer yet at this point in our journey)
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Let’s Do the Rental House Numbers!
| Line Item Detail | Amount | Comment |
|---|---|---|
| Purchase Price | $55,500 | Slam dunk! We also got $1,500 back at closing so Total price is $53k |
| Down payment 20% used portfolio loan at local bank | $11,100 | 20% down on a portfolio loan at 5.125 |
| Closing costs | $1,547 | Closing cost -after all pro-rations and deposit transfer and seller contribution |
| Total cost of deal | $57,047 | |
| Anticipated Rent | $860 | |
| Monthly Mortgage | $298 | 20 year portfolio loan at %5.125 |
| Anticipated monthly Expense | $100 | Average of $1200 a year in expenses |
| Monthly property taxes and insurance | $125 | less taxes because its a duplex |
| Monthly cash flow | $337 | Good one |
| Rent to Purchase price Ratio | 1.55% | This is a another home run for us. |
Net Worth Update
We crossed 400k with this one!
