Take What it Gives You
The Basics of the Deal:
“Take what it Gives You” was purchased for 35K and offered us some options when it came to making rent ready.
We called this “Take what it Gives You” because the property was constructed as a Duplex with a 1 bedroom, 1 bathroom + Kitchen and Living room on each side.
The duplex offered a shotgun hallway right down the center with access to each unit, the shared laundry room and the backyard. The wrinkle in this purchase was the kitchen had been stripped out of the unit on the left leaving us with the option to replace a kitchen or convert to some other use.
The units had new paint, new windows, new roof and needed a new carport.
Expected and Initial Plan:
After reviewing the costs and expected rents of each option we decided to convert one side into 3 bedrooms and thus making a 4/2 house.
For quick review we could have created a nice duplex for about 10K-12K and rented each side for $500-$525. Or for 8K we could create the 4/2 house and receive $950-$995 rent.
Remember if it is rented as a duplex our monthly expenses go up because we would pay water and gardener not to mention have to deal with multiple tenants in a small single structure which can be shall we say “interesting”.
Actuals:
We ended up spending just under 8k as the new carport cost a little less than expected as we were able to reuse 4 of the 6 posts already in place and we ended up getting $950 rent for the house.
Current Status of Property:
This property is still in what we call the seasoning process where surprises happen. But to date no additional expenses have sprung up. We plan to hold this property for the long term.
Lessons Learned:
You can be creative when making units rent ready to maximize your income and if someone strips a kitchen you don’t have to replace it.
Something that has thus far gone unmentioned is we closed this house in under 15 days and that is why the bank agreed to our low offer. We have a great reputation for closing and it really paid off with this deal!!!
This is a people business and thus you need to do what you say you are going to do. We are already working on two more deals with this agent because we closed on time and bent over backwards to make their time line work!!!
Grade the Deal and Why:
We give this property an A as we came in slightly under budget and we turned lemons into lemonade (Who said missing a kitchen is a bad thing???).
Future Plans for Property:
The property is in a decent area and we will keep 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 25K on the property and thus can secure a small 2nd without risking security of the property.
