What Could Be
The Basics of the Deal:
“What Could Be” was purchased for 40K and it was listed as a 2/1 at over 1,200 square feet with a detached garage.
We called this “What Could Be” because when we walked through the house, we realized that the step-down family room could easily be converted to a master bedroom with a reasonably sized closet. The house is in a decent area and would be highly desirable as a 3/1.
Expected and Initial Plan:
We initially expected the house to cost 8K in make-ready costs. It needed the basics, some serious attention in the rear yard with several large dead trees, and the creation of a master bedroom. We expected the house to rent for $995 a month and rent rather quickly given the area in which it is located.
Actuals:
We ended up spending just under 8K on repairs, and we rented the unit for $995 before the house was ready.
Current Status of Property:
We still own the property and are pleased to report that the same family that moved in after we purchased it is still in the house and happily paying the rent. During the winter we had to replace the old wall heater with a more efficient unit, but that is the only large expense post move in to date.
We are actively looking to extract equity via a bank line or private money.
Lessons Learned:
Just because a house is listed as a 2/1 doesn’t mean it can’t be a 3/1 with some simple additions. Please note that most 2/1’s can’t easily become 3/1s, but some can, and if you can buy a 2/1 and rent as a 3/1 you have found some solid cash flow.
Create a quality product in a nice area, and renters will stay for a long time.
Cut down large dead trees, as they can become problems the longer you leave them unmanaged.
Grade the Deal and Why:
We give this house our first A. We came in slightly under budget, rented the unit at our expected rental rates, and the original tenants are still in the property.
Future Plans for Property:
We have already secured our Private Money 2nd on this property, and we will hold for long term
