Recently picked up a 2 bed 1 bath home with 902 SqFt near the University of Arizona in a great college rental area. Also, being close to downtown Tucson, it has solid potential for a family residence.

Originally picked up this house by mere chance. Driving through the neighborhood, we saw a 6"x12" FSBO sign in one of the windows and made the call. The owner no longer lived in the area and was unable to get the house rented in its current, rundown condition.

The owner wanted to get the property off his hands and asked for $62,000. The initial plan was to get him down to $55,000, but we decided it was too strong of a deal to draw out negotiations (and let other investors sneak in offers) and gave him the full $62,000 (closed April 29).

Having done a few other properties in this neighborhood, we didn’t have much trouble envisioning the remodel. The plan is to add about 1,000 SqFt and convert the home into a 4 bed 2 bath. We will have to gut and redo everything (electrical, plumbing, kitchen, baths, flooring, etc.).

The Investment

Purchase Price: $62,000
Remodel Cost: $105,000
Carry Time: 6 months (4 months for remodel and 2 months to list and close)
Finished Product: 4 bed, 2 baths - approx. 1,900 SqFt

Option 1: Flip

ARV: $230,000
Actual Sale Price: $211,000 (230,000 - 19,000 closing costs [2%] and RE commission [6%])
Profit: $44,000
Cap Rate: 26.3% (44,000 / 167,000)
Yearly Return: 52.6% (44,000 x [12mo/6mo])

Deal Diary for Dummies: Wholesaling, Flips & Rentals #1 - Tucson, AZ - 2 beds, 1 bath

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