SFR Rental Property #3 Acquired - Plan Accelerated

[Randy E.]

I just paid for my newest rental.  It's in a quickly-improving neighborhood that was a D neighborhood two years ago, is probably solid C now with downtown and near-downtown gentrification moving in from two directions and what I'll generously call "opportunity" properties still on the other direction.  In a year or two, this home will probably be in a solid C+ or B- area.

It's a tidy little 3/1 brick, built in the 60s, that doesn't need much work.  Needs new gutters, facia board work, plumbing check, carpet, appliances, and minor kitchen work.  Oh, and I'll probably have a huge tree taken down in front of the house -- I don't think the insurance company will insure the house with that menace on the property.  Already has vinyl windows.  I have my guys lined up to begin work next week.  Barring bad news with plumbing and electrical, I'm guessing on a $6K budget and about three weeks.

I got a steal of a deal as the home cost only $9K.  I'll be all in at $15K.  The rent should be $750-$825.  If gentrification engulfs this neighborhood as I expect it will, 2017 rents may be in the $1000-$1100 range. 

I could probably sell for $40K today, and $55K after my minor updates.  Gentrification has already taken over the area 3-8 blocks away.  There, this home, once updated as I plan, would probably go for $75K today.  I plan on holding it long term and renting it for decades to come.

Coming into 2015, I hoped to buy one property by spring, and hoped against hope that I could get another around Thanksgiving. Seeing as this one came so cheaply, I've altered my plan. I think I'll get a second in 2-3 months, and try for a third by November. By the end of the year, I could own four properties outright and only be carrying a small loan for the fifth. If I can achieve that, my fifth SFH rental overall, that should set up a very exciting 2016.

Sorry for the long post, but I'm an excited little REI puppy.

I hope to post pictures in the next few days.

[Randy E.]

@Michael Jobe thanks.  I'm already looking for more properties in that area.  There are always a few available, but the fit hasn't been quite right yet.  Now that I have a house in the area and I'm around there more often, I'm sure I'll get wind of a word-of-mouth deal. 

Once the home is ready to rent, I plan on having a big cookout in the front yard for the neighborhood.  I'll probably spend less than $100 on hot dogs, hamburgers, chips, soda, and plates/cups, but it will build a lot of goodwill in the neighborhood. I'll use that cookout to get the word out that I'm looking for properties that people might want to unload for quick cash deals.  Free food will get people in an agreeable and talkative mood. :-)  "You know, my man Fred inherited this house from his uncle Gerald and he's three years behind on his taxes and wants to get rid of it, but he hasn't gone about putting it up for sale yet.  It's right around the corner.  You interested? ..."