Rental House – #76 Another Cash Flowing Duplex

March 2020

22118 Loaf Smallness – Rental House #76

Half of The Stealthy Rich is addicted to the MLS. If you don’t know about the “MLS,” it’s the Multiple Listing Service, which is where all realtors can list properties. Zillow.com, redfin.com, realtor.com, and every local MLS like har.com are examples of sites that are fed by the MLS. He checks every day, and most days, nothing is exciting there for us, just a bunch of “retail” priced properties not suitable for investors, but every once in awhile, something piques his interest. Well, today, we were lucky.

A two bedroom two bath duplex popped up with about 1,200 square feet. It was listed for $85,000. The story on this one is excellent. It was owned by an out of state landlord who had only had it for a year. As you can see from the before pics, it was in good shape and needed only a few repairs. He must’ve had a bad experience to get rid of it so quickly. The Stealthy Rich offered $74,500 and a quick close. (Plus we got 2,235 commission as the buying realtor) You might be wondering how we got it for so cheap. Well, we offered no inspection, close in 7 days, AND $10,000 in earnest money, which we deposited immediately that day with the title company. Hard for a seller to say, NO, to that!

HUD Statement for Purchase

Initial Purchase HUD

Before Rehab Rental House Pics

Right Side of Duplex

Front Bedroom

Front Bathroom

Love those sheel sinks

Living room

Fireplace

Kitchen with butcher block countertops

back bedroom

Master bath

needs some yardwork

Rental House Rehab

On this property, we had to paint the walls and replace a few floors. The bedrooms had carpet, and the bathrooms had some cracked tiles. We had our floor guy remove carpet and cracked tile and replace it with LVP. (Luxury Vinyl Plank. It’s bulletproof for us and super cheap.  We also painted every wall, our classic SW7016 Mindful Gray. Then we replaced all old Formica countertops with Luna gray granite and changed out sinks and faucets. These old countertops were “awesome” as they had a built-in cutting board, which was disgusting.  The place looks brand new now.  Here’s a recap of what it cost.

After Pics  for Rental House #76

Cute little duplex

Colorful front door

Living Room

laundry and storage

Master Bath

LVP looks so good

New Countertops

Rent and Refinance

Ok, guys, this is the first house we’ve blogged about here in real-time. We haven’t even rented this one yet, but it’s been listed on the MLS for the last five days. We are getting about four showings a day because it’s priced well. The problem is the street is a little rough, lol. We will find somebody soon, though. We dropped it down to $1075 because of the Coronavirus uncertainty. We just want it rented and done.

The Stealthy Rich also have a loan ready to go from our favorite small regional bank for 80k. This loan amount means we get all of our money so far back out. As the house cost ~73kish and we put almost  6k in. The bank appraised this house for 100k and will loan us 80% or $80,000. The only question is if it will go through with this crazy pandemic goin’ on. Fingers crossed. It will be a 20-year loan @ 5%. The rate will reset every five years. Its an ARM, not a balloon payment, so that’s nice.

Let’s Do the Numbers

So on this one, let’s run some monthly numbers that are exact so you can get a feel for what it will be like in year 1.

Many of you might think this is a lot of work for a measly $140 bucks a month, and you might be right, but here’s a little more info on why it’s awesome. In the first year, we will pay down roughly $2,000 in principal pay down on our loan because this is only a 20 year loan. If we could do 30-year loans, our cash flow would go up by $100 a month. Instead, that money is in that principal pay down number. Also, we will be able to raise rent, hopefully. Furthermore, we won’t pay taxes on almost any of it thanks to favorable real estate laws, not to mention this little guy might go up in value a little bit.

Once we realized we had zero investment in this property and many others, we decided we wanted to own as many of these as possible. The rate of return is limitless. Its infinity, as we are being paid roughly $3,600 a year on this house with zero of our own money in it.

Stay healthy out there; we will be right here with the next project before you know it.