First (of hopefully many) Rental in the Books

[Brian Croll]

It's been a crazy year so far. My wife and I purchased our first intentional rental property (we had rented out a previous personal residence that we've since sold), we are trying to keep up with our 3 year old and expecting our second kid next week. We will be a little bit 'out of the game' since my wife will be taking 6 months off for maternity leave. I figured sharing our story may be motivation for some folks as well as keeping me thinking about it until we are ready to buy house # 2.

The House: REO purchased, 3 bedroom, 1 1/2 bath ranch

Major Renovations: We gutted and reconfigured the kitchen to be usable. The bathroom got a new toilet, vanity and flooring. All the hardwood floors were refinished. All wood paneling was replaced with drywall or painted concrete and a fourth bedroom was added in the basement.

Numbers:

Purchase Price - $51,000 financed with 25% down

Rehab Costs - $16,000  ($4,000 over projected budget) Unexpected electrical work made up a big chunk of the overage, we found open wires behind wood paneling and in the attic.

Monthly Expenses - $427 (principle, interest, taxes & insurance)

Monthly Rental Income - $940 

Since we purchased the home two homes in the neighborhood have sold for $90k and $93k. They were the same floor plan but with only 3 bedrooms. I am hoping to be able to leverage equity in the home to aid with the purchase/renovation of our second home early 2016.