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Updated about 3 years ago on . Most recent reply
Newbie. Old family home. Fix and Rent, or Cut and Run?
Hello, BP community!
We are new, aspiring investors.
Several years ago, we moved to the Tulsa area to be near our grandmother. In 2018, she moved to assisted living and we sold our home and purchased hers for $68,000. The house was built by my grandfather in 1938 (he had it built, not by his hands) and I grew up there. Our initial intention was to live there for years and slowly fix it up, as it needs quite a bit of work; think central heat and air, windows, fencing, as well as updates (among other things). We already paid $14,000 to upgrade the wiring, but have quite a bit of rehab to go. The home is around 1,200 sf, 2bd / 1ba with a detached 3 car garage, where one stall has been converted to a separate area w/ additional bathroom, which could potentially be another small studio rental.
When COVID came, my partner was transferred to Connecticut. We sold a small cabin we owned in order to make a down payment on our Connecticut house, as our house in Oklahoma still has much of my grandmother’s possessions occupying space (we were tasked with getting rid of her furniture and many collections). We planned on having an estate sale to clear her things. Right now, it is just sitting, costing $.
The assessed value of the property has doubled in these past 3 years due to gentrification and a revitalization of the downtown area, which is walking distance from our property. The house, itself, is very unique and appealing on the outside, but does need some work.
I recently saw a video podcast with Brandon Turner, where his guest made a suggestion to those just starting out in real estate investing to "rent what you've already got". The above-mentioned are the only real estate dealings we've ever had, but are looking to learn and potentially build a portfolio. I think our property could have potential to be a nice STR, but am at a loss about what to do, how to start, or whether it is worth it or not.
If anyone has any advice or ideas, I am eager to learn and ready to move forward, one way or another.
Thanks everyone!!!
Most Popular Reply

I would say do the thing that will probably be the hardest thing to do...sell the house "you grew up" in. The profit is more valuable to you based on what you can do with it, than the limited CF you'll get which will be offset for many years (based on the age of the property and subsequent rehab needed) by the cost of the rehab. If you sell, take the profit and use a a 20% down payment on a true rental property with high positive CF, you'll be light years ahead in profit by the time you break even holding this property and doing the rehab.
Do the first step of the math:
1 - Figure out what profit you'll make selling the property.
2 - Then calculate all the rehab needed, all the monthly expenses you'll need to cover holding it with a tenant in place (add in the monthly expenses when the tenant isn't there...as in rehab time), and subtract that from the potential (realistic...not high end wish).
3 - Multiply that number times 12 to get the yearly cash flow "potential".
4 - Now divide the number from Step #1 by the number from Step #3.
That's how long it will take you to wait for the cash flow to equal the dollars in hand right now.
5 - Take the number from Step #1 and multiply it times 5 to get the total property value you can buy using the Step #1 cash as a 20% DP.
6 - Compare number from Step #5 with Step #1 to see what you're losing in Property Value if you hold the property.
7 - Find out what the potential CF could be on the properties you bought from Step #5, and subtract that with the number from Step #'s 2 and 3. That's how much Cash Flow you're losing by holding this property.