Long Term Rental Renovated to add $500 cash flow

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Long Term Rental Renovated to add $500 cash flow

Ryan HooverBusiness Member
Real Estate Broker · Scottsdale, AZ · Member since 2018 · 125 posts · 82 votes

I purchased this Cave Creek, AZ property in May of 2019 for $280,000.  There was a tenant in-place paying $1475 a month which was a little better than a break even deal with the cash flow being about $100 a month.  The tenant moved out in the end of 2020 when we decided to take on a complete renovation to boost rents.  The project cost about $32k and took just over a month.  Property is currently being marketed for a new tenant at $2100 a month.  Increase of $625 a month in cash flow!  Plus the new market value is right around $365,000.

[email protected]602-820-3674
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Matt M.
Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
5y

@Ryan Hoover

Nice house, but I could never imagine paying that kind of money and only getting that kind of cash flow.

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  • Caleb Rowe
    Rental Property Investor · Buffalo, NY · Member since 2020 · 29 posts · 30 votes
    5y

    Well done!

    0Reply
  • Nick Brockelman
    Real Estate Agent · Tempe, AZ · Member since 2017 · 13 posts · 4 votes
    5y

    Very nice! New floors and a fresh coat of paint go a looooong way and pretty easy to do!

    0Reply
  • Dan Kerch
    Lender · Phoenix, AZ · Member since 2020 · 34 posts · 12 votes
    5y

    Looks great! Nice work!

    0Reply
  • Ryan HooverBusiness Member
    OP
    Real Estate Broker · Scottsdale, AZ · Member since 2018 · 125 posts · 82 votes
    5y

    @Caleb Rowe @Dan Kerch @Nick Brockelman

    thank you!

    [email protected]602-820-3674
    0Reply
  • Tatiana Conta
    New to Real Estate · Phoenix, AZ · Member since 2020 · 53 posts · 17 votes
    5y

    @Ryan Hoover Ryan can I ask you, I am new to RE, does the 1% rule not matter here ?

    Thank you in advance for such insight

    0Reply
  • Marco G.
    Investor · Dallas, TX · Member since 2015 · 446 posts · 197 votes
    5y

    @Ryan Hoover

    Looks like a total win in the numbers. What changes/improvements did you make in the $32k renovation?

    0Reply
  • Ryan HooverBusiness Member
    OP
    Real Estate Broker · Scottsdale, AZ · Member since 2018 · 125 posts · 82 votes
    5y
    Originally posted by @Tatiana Conta:

    @Ryan Hoover Ryan can I ask you, I am new to RE, does the 1% rule not matter here ?

    The 1% rule is just a guideline that many are striving for, but not necessarily possible in all markets.  In the Phoenix area it is really hard to come by that much cash flow.  For the purposes of my goals, I’m really just looking to get $200 cash flow with 20% down in great neighborhoods that I predict will have above average appreciation.  Hope that helps.   

    [email protected]602-820-3674
    1Reply
  • Ryan HooverBusiness Member
    OP
    Real Estate Broker · Scottsdale, AZ · Member since 2018 · 125 posts · 82 votes
    5y
    Originally posted by @Marco G.:

    @Ryan Hoover

    Looks like a total win in the numbers. What changes/improvements did you make in the $32k renovation?

    That price included:

    • Floors with baseboards
    • Interior paint
    • New carpets
    • Paint all cabinets
    • Quartz countertop kitchen and bathrooms 
    • Led lighting and fixtures
    • Door hardware 
    • Bathroom hardware 
    • Stainless steel appliances 
    • Landscaping 
    [email protected]602-820-3674
    0Reply
  • Tatiana Conta
    New to Real Estate · Phoenix, AZ · Member since 2020 · 53 posts · 17 votes
    5y

    @Ryan Hoover That bit of insight definitely helped, thank you!

    0Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    @Ryan Hoover

    Nice house, but I could never imagine paying that kind of money and only getting that kind of cash flow.

    2Reply
  • Toby Schine
    Member since 2020 · 3 posts · 1 vote
    5y

    @Ryan Hoover nicely done!!

    0Reply
  • Robert Purdy
    Rental Property Investor · El Paso, TX · Member since 2020 · 7 posts · 5 votes
    5y

    @Ryan Hoover that’s awesome man! Looks great. I love the immediate appreciation you can force into a property with some renovations!

    1Reply
  • Ryan HooverBusiness Member
    OP
    Real Estate Broker · Scottsdale, AZ · Member since 2018 · 125 posts · 82 votes
    5y
    Originally posted by @Matt M.:

    @Ryan Hoover

    Nice house, but I could never imagine paying that kind of money and only getting that kind of cash flow.

    Yeah I can see that perspective if your primary goal is cash flow.  In my market, it's difficult to find high cash flow in the class neighborhoods that I want to invest in.  Focusing on rentals in the $1500- $2000 range helped me to avoid any missed rents or eviction moratoriums during the pandemic.  Just rely depends on your own personal investment goals.

    [email protected]602-820-3674
    1Reply
  • Ryan HooverBusiness Member
    OP
    Real Estate Broker · Scottsdale, AZ · Member since 2018 · 125 posts · 82 votes
    5y

    @Robert Purdy @Toby Schine

    Thank you!

    [email protected]602-820-3674
    0Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    @Ryan Hoover

    I won’t buy for just cash flow. I wait and find the right ones, buy them cheap and renovate myself. It equates to cashflow and appreciation. Maybe not the appreciation of an A class development home, but I’m a C+ investor. Here’s my last buy august 2019- $60k purchase, $15k rehab, currently rented for $1450, house next door is identical and sold for $153k earlier this month, but my house is much nicer since it’s a new rehab. 

    1Reply
  • Alex Flores
    Member since 2020 · 2 posts · 0 votes
    5y

    @Matt M. Hello Matt, what area are you in?

    0Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    5y

    Good move. I’m in your same situation. When my tenants leave in May, I’ll need to drop 30-40k to get an extra $600/month rent. It’ll be worth it in the long run.

    0Reply
  • Dan Kerch
    Lender · Phoenix, AZ · Member since 2020 · 34 posts · 12 votes
    5y

    @Ryan Hoover let’s connect next week. 

    0Reply
  • Ryan HooverBusiness Member
    OP
    Real Estate Broker · Scottsdale, AZ · Member since 2018 · 125 posts · 82 votes
    5y

    @Matt M. That’s a great deal.  What market are you investing?  Even the biggest fixer upper in the Phoenix market is going to be $200k.  That kind of returns are a unicorn in my area.

    [email protected]602-820-3674
    0Reply
  • Ryan HooverBusiness Member
    OP
    Real Estate Broker · Scottsdale, AZ · Member since 2018 · 125 posts · 82 votes
    5y
    Originally posted by @John Morgan:

    Good move. I’m in your same situation. When my tenants leave in May, I’ll need to drop 30-40k to get an extra $600/month rent. It’ll be worth it in the long run.

    Nice!   Sometimes you are hoping the tenant just renews because having that available capital can be tough. Luckily in my case, I had enough equity built in that short time to do a cash out refinance that equated to $28k while keeping my payment the same due to the lower interest rate.

    [email protected]602-820-3674
    1Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    @Ryan Hoover

    Right here in Pa. that house is a mile away from my house. I have others about 25 mins away that I paid even less that rent for $1200. Not typical these days, but I’ve gotten lucky. 

    0Reply
  • Matt Nico
    Member since 2019 · 448 posts · 306 votes
    5y

    @Ryan Hoover

    This is awesome man. Congrats. I have been doing this exact model of buying homes and rehabbing to add value and boost rents. Your rehab looks very clean. Keep up the great investing work.

    0Reply
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