$1700/mo. increase in rent for $60k renovation!!

[Julie L.]

Hello fellow BP folks! I wanted to share one of the projects that I completed that led me to finding my way to BP's forums and has inspired me to start my journey on flipping homes. I also hope anyone reading this might find inspiration in my story to work toward their REI endeavors whether it be through investing, selling, strategizing or networking! For myself, I know I come to the Success Stories forum for all of the above :)

A couple years ago my husband and I were living in a 3/1 apartment here in the SF Bay Area and we were paying a ton of rent. After talking with my inlaws about our future plans I realized that they were sitting on unrealized cash potential. They owned a home that was being rented WAY BMR. The home had not seen any major repairs or modifications in over 25 years! In an effort to help my inlaws and our family I created a combo sweat equity/house hacking plan that would allow them to recoup their money in a few years (and start seeing a significant increase in cash flow thereafter) and would simultaneously allow us to have a home to live in that was newly remodeled for less than we were renting our apartment for. 

The house is a two level home with garage and back patio area. Upstairs is a 3/1 and downstairs is 1/1. The whole house was being rented for $2150/month to one family. I think they raised the rent once by $50 in the 8 years the tenants had lived there. I proposed we move the tenants out, spend 4 months on reno with a $60k budget, we live upstairs and pay the same the prior tenants were paying for the whole house and we rent the downstairs for a total rental income of $3850. By doing this I figured we would accomplish several things:

1. They make their $60k investment back in approximately 3 years.  

2. After which time they will start seeing a $1700 increase in their rental income.

3. They increase the equity of their home through forced appreciation. 

4. We have a nice new place to live for less than we were paying to live in a similar size old dingy apartment.

The proposal went well (budget stayed on track and estimated rents were achieved) and we have fulfilled all of the above goals and in 1 year from now, they will have made all their money back and can sit back and enjoy the $1700 increase in income! 

Here are some before and after pics for inspiration. As added inspiration, I managed the entire process of moving the tenants out, managing and completing the rehab, moving my family into the home, and getting the bottom unit rented to solid renters, all while being a mom to 2 kids under 2 and working a full time job :)

Here are the afters: 

Hopefully I inspire at least one person today to get moving towards achieving their REI dreams. I love the power of REI!!

Have a great day all!