First rental renovation

[Alex Smith]

Back in October 2016 we bought our first rental property in southern NJ! A 1500 sq ft. duplex, each unit 1 bed/1 bath.  We bought it for $79,000, with 20% down and were able to qualify for this mortgage because at the time, it was an income producing property. The top unit was being rented for $675 (month-to-month) and the bottom for $800 (yr lease). We were very nervous about inheriting tenants, but if that was going to be the way for us to get into RE investing, we were going to figure out a way to make it work. Luckily, we negotiated $3,000 towards repairs that the previous owner gave to us at closing and this was what cushioned our business account for this unit, making us feel a little more comfortable in the beginning. Once we owned the property, we realized that the guy we bought it from checked out as a landlord long before selling the property and didn't keep up with ANY of the maintenance. The property was cash flowing about $500/month from the time we bought it and we just saved every penny knowing that we were going to end up having to put a lot of money back into the property. 

Long story short, the bottom tenant was a dream and the top tenant was a nightmare. His bathroom kept leaking through the downstairs "bonus" room and so we were able to temporarily fix the problem and use this as our excuse to get him out. It was an excuse but then again it kind of wasn't because we knew there were big problems with the top unit that needed to be addressed asap.  We gave him notice in April that he needed to be out by the end of June. We PHYSICALLY helped him move all of his stuff out (he's handicapped). Some people told us we were crazy, but we knew that if we didn't physically move him it wasn't going to happen. 

It took us 7 weeks to fully renovate the top unit, which was a few weeks longer than what we were hoping, but we ended up having to do extensive plumbing and electrical work that set things back a couple weeks. Things come up! Glad we saved and planned ahead for this scenario! Always be prepared! Fast forward to September 1st and we have a much higher quality tenant in our newly renovated unit. We had him sign a new year lease and the downstairs tenant renewed for another year as well. Through the combination of fighting our property taxes and winning and raising the upstairs tenant's rent by $50, we are now going to be cash flowing about $600/month. Well worth the headache of dealing with a previously problematic inherited tenant! I've attached some pictures of our rehab :)

UP NEXT: About a month ago, we settled on another house...3 bed/1 bath 1000 sq ft. single family home. We got it for $35,000 and entered in a partnership with my wife's dad to flip this one! Wish us luck!