Renovation Project Complete! Great rental

[Cassidy Burns]

Hi BP, 

Extremely excited/pleased with how my last 2 renovation projects have gone.  Here are the numbers on the most recent one:

Purchase Price: $12,000 cash

Paid sellers closing costs: All in $12,981

Renovation Supplies/Rehab: $3,489

Total All In: $16,470

Rent: $615/month

ARV: $45,000-$50,000

Still haven't decided if I want to do a HELOC on this unit or not in order to purchase a few more rentals. Overall very pleased! Plus I think I found a contractor that is going to be very reliable, FINALLY!

[Thomas S.]

Dead equity is cash that is not being invested. Some view it as a very high price to pay for artificial cash flow. It is hoarding of cash. Equity is where cash goes to die since it is not being forced to earn it's keep.

Because cash is deemed to have a opportunity value to investors at a minimum 10% return when you have dead equity sitting in a property you must pay a 10% return on the equity as your first expense deduction from the rental income. This will usually result in creating negative cash flow on the property itself not making it worth investing in.

Your equity needs to be pulled out and forced to work by spreading it around as many investment properties as possible.  It will then, assuming the properties are good investments, generate a maximum return and maximising apparition benefits. 

Cash buyers are hoarders that receive the lowest possible returns on investments. They are extremely conservative investors and in real world dollars make less than they would in a investment fund. ROI is extremely low.

Your 50K in equity is eating $433 every month from your $615 rent, expenses will eat another $250 leaving the property as a liability.