House #7 – 22718 Carved Bearlike Burro – We’ve Got a Live One!
December 2013
For house #7 on our asset list, it came from yellow letters once again. We got a call, and my partner, D, negotiated an excellent price for this three-bedroom, two-bath house. They were moving out very soon and were prepared to sell. It needed a little updating and sprucing up, and we were ready for the challenge.
Financing and Rehab of This Rental House
We ended up getting this house under contract for $72,000, which was fantastic. We got a loan on this house for 61,200, which is 85% of the purchase price. This deal meant we needed $10,800 for a down payment, plus repairs. These repairs started to add up as well. We had to replace toilets, tub surrounds, carpet, paint, plumbing repairs, and electrical repairs. Also, for the first time, we replaced the kitchen counters with granite. We used a great company we found in Houston, which was very affordable. All in all, we spent $18,288 to get this one rent ready.
Rehab Bad Luck
We ran into a few problems when we were rehabbing this house. We had a severe storm, and a tree fell on the roof! It punched a few holes in it but nothing too terrible. We had it fixed, thankfully. However, in the meantime, a few squirrels made a house in the attic and were wreaking havoc. We still didn’t have a squirrel removal guy on the Rolodex yet, so I went over there and extracted them myself. It wasn’t fun, and I don’t recommend it if you want to have a good experience in real estate. Seriously, it was the worst. I also found a few holes in the fascia on the side of the house while removing the squirrels, so I patched those as well and painted them. We found a pest guy quick after this for future pest problems. Also, this was my last bout with repairing fascia.
House Pics
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Let’s Do The Numbers
| Line Item Detail | Amount | Comment |
|---|---|---|
| Purchase Price | $72,000 | |
| Down payment 15% | $10,800 | 15% down on a Portfolio Loan from a local bank |
| Closing costs which included first year of insurance | $2,500 | Closing cost |
| Rehab Costs | $7,500 | Carpet, Toilets, electrical, granite countertops, tub surrounds, paint, roof repair |
| Total cost of deal | $82,000 | includes rehab |
| Anticipated Rent | $1,195 | |
| Monthly Mortgage | $386 | portfolio loan 20 years at |
| Anticipated monthly Expense | $200 | Average of $2400 a year in expenses |
| Taxes and insurance | $250 | |
| Monthly cash flow | $359 | This does not include the principal paydown which is built into the loan |
| Rent to Purchase price Ratio | 1.45% | This one is so good! 1.45 is a Home Run for us. |
What We Learned From Buying This House
This house is the first time we dove into plumbing. We redid much of the bathtub and sink connections and replaced all tub surrounds. For the first time, we decided to replace countertops as well, and it was straightforward and inexpensive. It also made the house pop!
Net Worth Update
