Front and Back
The Basics of the Deal:
“Front and Back” was purchased for 42K and it was listed as a 2 family on single city lot. The description was fairly cryptic but at a list price of 50K it was interesting enough for me to call my team and ask them to drive by to confirm units, location and condition. Turned out the listing didn’t do the property justice.
We called this “Front and back” because the first house (The one at the top of the picture) was a 2/1 with a large front and back yard. The second (The one at the bottom of the picture) was a larger 2/1 plus office or den with its own front and backyards plus a carport.
The units have their own meters, mailboxes and defined property lines. Lots of investors missed this one because of the property description because individual houses were selling in the mid 40’s and we bought 2 houses for 42K. Kind of crazy and a lot of fun!!!
Expected and Initial Plan:
We initially expected the houses to cost 10K in repairs as they needed just the basics of carpet, paint, yard work and some fence work to insure defined property spaces. We thought we could get $700-$750 for each house.
Actuals:
We ended up spending close to 11K as we ended up replacing both Water Heaters and 1 AC that was not initially in scope else we would have come in under budget. Turned out we got $750 for the front house and $775 for the back house.
Current Status of Property:
We still own the property and are happy to report that the same families that moved in after we purchased it are still in the house and happily paying the rent.
We did perform some extra work on the kitchen counters but outside of that expense the property has been a dream. We will keep clipping cash flow coupons on this property.
Lessons Learned:
If the description in MLS is odd or seems to talk in circles go look at the property because most people with just press on. Remember less competition means better deals.
People would rather rent single family homes than apartments especially when they have their own defined space/yards.
I’ll keep my eye out for more small houses (Especially if I can repeat the $21,000 each).
Grade the Deal and Why:
We give these houses an A- as we came in slightly over budget and we rented the units for more than we expected.
Future Plans for Property:
The houses are in a great area and are very desirable rentals. We will keep them for the long term. We will look to extract a small sliver of equity via a bank equity line or private money loan as we only owe about 20K on the houses and thus can secure a small 2nd without risking security of the property.
