Diary of a Small Rental Property with Rehab

Diary of a Small Rental Property with Rehab

Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes

I always wanted to do a "deal diary" and now I have the chance to do one!  This will be my 13th property acquisition and so I'm hoping to make it lucky number 13!

A 3-bedroom, 1.5 bathroom 1,054 square foot townhouse condo came on the market recently and it needs quite a bit of rehab.  I made an offer on it for $10,000 and the seller wanted more, and I countered with $10,900.  I did not want to spend any more than $11,000 due to the rehab that was needed, so I was pleased that I saved $100 over what I was willing to pay.

Some "before" pictures in all their ugly glory.  (Please note that I am not a very good photographer.  My pictures are often blurry and practice has not helped them get better over the years.)

Kitchen

Cabinets are from 1970 for sure, there is a drawer missing, under the sink is disgusting.  The kitchen floor is disgusting too.  These are definitely getting replaced.  The kitchen faucet is broken and will also be getting replaced.  The stainless steel sink is still in good condition so I will be cleaning and keeping that.

Living Room

The carpet is dirty, old and disgusting.  It is definitely not staying.  You can sort of see it in the upper right corner if you look closely, but there are fake bricks on the wall.  It's very odd.

Bathroom 1

The condo has two bathrooms -- a half bath on the main level and a full bath upstairs. This is a picture of the half bath.  There is the original 1970 counter top with its funky design that is not staying.  And the toilet -- oh, the toilet.  It is for some mysterious reason plumbed in the commercial fashion where it exits out the back not the bottom.  The flooring is also very 1970 and it's getting the boot as well.

Bedroom 1

This is a picture of one of the 3 bedrooms.  All the bedrooms are large enough to fit a king sized bed in, and still have room to walk around. This room seems to have one layer of floor on top of another.  The bedrooms will get new flooring and fresh paint.

Other projects planned for this rehab:

- Replace a window

- Replace the front door (possibly the back door too)

- Massive amounts of cleaning

- Update smoke detectors and add carbon monoxide detectors, new locks, window treatments

The closing date per the contract was to be no later than March 31, 2015, however the title company is having issues getting the required information from the HOA, so we may need to extend out closing a couple days.

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Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes
11y
Congrats on the great cash flow purchase! Looks like a Woodlands condo.
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  • Investor · Leominster, MA · Member since 2011 · 1k+ posts · 589 votes
    11y

    Man that is cheap. What will the ARV be when you complete the rehab? How much do you expect to spend? Is this a flip or will you hold it and rent? Whats would the rent be? Enough questions for you? And good luck!

  • Realtor · Charlotte, NC · Member since 2014 · 935 posts · 467 votes
    11y

    @Dawn Anastasi thanks for sharing, looks like you are going to make a great improvement to the neighborhood, 

  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y

    This is a rental property, not a flip.  I'm not doing flips, although I would still like to do one someday.

  • Investor · Maui, HI · Member since 2012 · 232 posts · 96 votes
    11y

    @Dawn Anastasi

    Congrats Dawn! Can't wait to see the finished product. This would be fun!

  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y

    I'm hoping my budget to stay around $6,000.

    The rent should be about $725/month, maybe $735/month.

  • Springfield, MO · Member since 2014 · 16 posts · 3 votes
    11y
    Dawn Anastasi congrats on this deal! Sounds great! I know you said it's not a flip, but if you were to sell it in its rehabbed condition, what are the comps around the area? Love the sound of those rents for that amount of money! Congrats again!
  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y

    Other condos in the area are selling between $10k - $20k.  The values are not very high.  My goal with this condo is cash flow.

    Today was closing day! Originally it was supposed to close by March 31, but there were some issues with getting closing data from the HOA.

    Friday 4/3 is the most exciting day -- shopping!  I will be buying the kitchen cabinets, flooring (vinyl and tile), window, doors, paint, counter tops, etc.

    Saturday 4/4 the demo work begins.

    More to come!

  • Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes
    11y
    Congrats on the great cash flow purchase! Looks like a Woodlands condo.
  • Flipper/Rehabber · Sugar Land, TX · Member since 2015 · 142 posts · 64 votes
    11y

    A $10k purchase with $6k in renovations to earn $700 is GREAT...

    Not sure what the HOA monthly is on this one but this is shaping up to be real nice!

  • Rental Property Investor · Durham, NC · Member since 2014 · 1k+ posts · 1k+ votes
    11y
    Originally posted by @Dawn Anastasi:

    I'm hoping my budget to stay around $6,000.

    The rent should be about $725/month, maybe $735/month.

     Those are fantastic numbers!!  You did a fine job of finding a great deal.

    Oh yeah, HOA fees. That's always a concern for me, but I'm sure it's reasonable or you wouldn't have done the deal.

  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y

    The HOA fees are $188.50 monthly with a $16.80 insurance assessment (for 10 months).

  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y
    Originally posted by @Darren Budahn:

    Congrats on the great cash flow purchase! Looks like a Woodlands condo.

     This is correct.  I own 2 other Woodlands condos as well.

  • Investor · Germantown, MD · Member since 2011 · 52 posts · 17 votes
    11y

    Very exciting Dawn! Please keep us updated on the progress. 

  • Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
    11y

    @Dawn Anastasi

     Do you expect any appreciation on this condo? I bought several condos in Southern California a few years back for $15k-$55k that went for $135k-$250k at the peak of the last cycle. In California, condos (especially low end ones) take a big hit in downturns when the buyers are limited to cash only. They rebound when the banks come back in and provide financing. Our idea is to cash flow the condos until the peak of the next cycle. Appreciation played a big part in our decision to buy. I'm just curious if that's part of your strategy and just how condos appreciate in other parts of the country.

    Congrats on the buy!

  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    11y

    @Dawn Anastasi

    Rear trap (P-Trap) toilets are not terribly common in residential use in North America, but are not unheard.   They are typically used in instances where fitting a trap underneath the toilet is either not feasible or cost effective.  That said, if I were using an P-Trap toilet, I would go for a wall mount model (makes cleaning much easier and take less space).   

    You can get wall mount toilets with either surface mount or in-wall tanks {surface mount is cheaper and easier to service).  You will pay a little more for a wall mount, but it may be worth looking into.

  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y

    I went shopping yesterday!  I spent about $1,800 on materials and supplies. This encompassed the cabinets, flooring for the living room, paint, locks, kitchen faucet, light fixtures, and other supplies.  The cabinets won't get in until April 21st.  

    I wanted a high-arc kitchen faucet and found one on sale for $64. The living room flooring was also a pretty big sale item at just $1.27/sqft. The bedroom flooring is on sale at $0.85/sqft.

    I still have the front/rear doors to buy, the flooring for the bedrooms, and some other minor things.

    Demo began on the new condo today!  The contractor was there ripping out all the old kitchen cabinets, bathroom counter tops, and carpet.

    Then I get a text from him: "I found something cool ... someone replaced a stair, with a hinged piece of wood, like a hiding spot for something small." Too bad nothing was in it! I keep hoping for the day I found a bag filled with hundred dollar bills!

  • Insurance Agent · AZ · Member since 2013 · 306 posts · 161 votes
    11y

    @Dawn AnastasiCongrats! I'm glad you're doing a diary. Where do you usually buy your supplies like your flooring, faucets, etc? 

  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y
    Originally posted by @Chanté Owens:

    @Dawn AnastasiCongrats! I'm glad you're doing a diary. Where do you usually buy your supplies like your flooring, faucets, etc? 

    The majority of items I buy at Menard's and sometimes I'll get things from Home Depot and other sources.  

    I don't expect this condo to appreciate that much; I'm utilizing it as a vehicle for cash flow.

  • Insurance Agent · AZ · Member since 2013 · 306 posts · 161 votes
    11y

    Sounds good! You're kicking butt with the rentals. You picked your niche and you're working it; nothing wrong with that. I'll be reading along.

  • Investor · Los Gatos, CA · Member since 2015 · 42 posts · 15 votes
    11y

    Thank you for sharing @Dawn Anastasi. It sounds like you have a good system for getting these properties ready to rent. I like your strategy and follow a similar plan for long term wealth development. Keep up the good work! 

    Which methods do you use to find properties that will meet your criteria?

  • Dawn AnastasiPro Member
    OP
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y
    Originally posted by @Brian Flack:

    Which methods do you use to find properties that will meet your criteria?

    I will look for different things. Originally I was "against" condos, because of the HOA fees and some lack of control, as well as the lack of a lot of appreciation, but then I changed my focus and instead looked at them differently.

    There is less maintenance as the exterior is handled by the condo association.  I don't have to worry about the grass cutting and plowing the parking lot as that's handled by the association.  There's a rec center in the campus that serves the residents' kids with arts and crafts, field trips and activities, so that's a plus for the renters.  I attended the condo board meeting so I could see the budget for the coming year, get a recap on the prior year, and make sure the association was doing well financially.

    For single family homes I look at things differently.  I'm concerned about the neighborhood and how it is, how old the home is, and what features it has.  I'm not afraid to take on renovation if I know it can get done at the right price.

  • Investor · Redondo Beach, CA · Member since 2013 · 147 posts · 50 votes
    11y

    Andreas, where did you find condos in SoCal for that cheap?

    Dawn, thanks for sharing this diary and congrats on such a great deal! I'm amazed at what great rent/price ratios the midwest can generate. For these condos below 20k, what kind of tenants end up renting these? And do these renters just not buy because they can't get financing at such low prices and don't have the cash to buy them outright?


    Originally posted by @Andy Mirza:

    @Dawn Anastasi

     Do you expect any appreciation on this condo? I bought several condos in Southern California a few years back for $15k-$55k that went for $135k-$250k at the peak of the last cycle. In California, condos (especially low end ones) take a big hit in downturns when the buyers are limited to cash only. They rebound when the banks come back in and provide financing. Our idea is to cash flow the condos until the peak of the next cycle. Appreciation played a big part in our decision to buy. I'm just curious if that's part of your strategy and just how condos appreciate in other parts of the country.

    Congrats on the buy!

  • Investor · Rock Hill, SC · Member since 2014 · 122 posts · 33 votes
    11y

    @Dawn Anastasi

    My partner and I just bought a $25K duplex and we did the demo yesterday. We found an easter egg too!  :)  A 12" x 12" black taped hole where a drywall hole was....on the back was about 100 dead roaches that unfortunately met their fate being stuck to the tape.

  • Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes
    11y

    @O'brian R

    I bought them at trustee sales between 2011 and 2013 in San Bernardino, Highland, Colton, and Victorville. Market values have at least doubled for all of them so there aren't the same deals now

  • Investor · West Bend, WI · Member since 2014 · 214 posts · 149 votes
    11y

    @Dawn Anastasi

    Dawn, isn't that a pretty rough area over there?

    I wouldn't say its a war zone but it isn't lake drive either.....

    What is your experience with tenants with your other two units in that area?

    Thanks

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