Found BONUS property on lot that was recently purchased

[Shiloh Lundahl]

We bought a property earlier this year.  It was first sent out by a wholesaler at 105k.  There was a small main house (1 bed, 1 bath)  that rented out for $450 a month and there was a manufactured home (2 bed, 1 bath) in the back that rented out for $650 a month.  I ran the numbers but they weren't very attractive to me at the time.  Then the wholesaler dropped the price to 99k and then finally to 89k.  We offered 85k and got it under contract for 87k.  It was in a less desirable city in the East Valley called Apache Junction, AZ (C- neighborhood).  But the tenants were long time tenants and their rents were below market value.  

So we bought the property and made a few repairs to the roofs and interior of the main little house and the manufactured home in the back and then we raised the rents a $100 each.  We were now into the properties about 95k and we were bringing in $1300 a month in rents.  Not bad. But after we bought the property, we saw another structure on the property that looked like it might have been a trailer that someone had built onto a some point in the past.  The tenants stated that it had just been used as a storage shed ever since they had been there.  But we had a better idea.

We had a plumber and an electrician look at it and tell us if we could get water and power to it again and they said that we could.  We called the city and it had actually been its own separate unit at one point in time.  So we put in about 10k to fix it up and make it livable again.  

We just put it on the market last weekend and we have already gotten 6 applications filled out by people who want to rent it.

Here are some before pics:

Here are some after pics:

Our total for rehab was about 10k.  We put it on the market to rent for $677 and we have gotten a multiple applications and we plan on renting it out this weekend.  

So here are the numbers:

We are working on getting financing for the property for about 80k and then get a second for about 20k, which would probably leave us about 5k in to the property.

Rents - $1977

Mortgage (80k at 5.5% for 20 years) $550

Taxes and insurance $110

Average utilities ( I pay a portion since some are on the same meters) $120

2nd position passive note investor (at 10%) $167

Cap X and maintenance $150

Monthly cash flow = $880 split with a partner or $440 each.

ROI = 880 x 12 = 10,560/5000 = 211% annually.

[Jay Hinrichs]

ADU so it was not a surprise its sitting there plain as day.. nice job. !! what we do is find historic platted lots that the lot lines have been erased by the county assessor and those with no knowledge of historic platted lots think its just one lot.

I have one in Portland that went like this.. and when I figure out how to post pictures I will.

but this is something Shiloh you should put in your quiver .

house on nice big lot in our market.. for 380k.. we look at it do our prelim measurements check with historic plats and while the owner or listing agent does not realize is in our assessment we have a lot of either side of the existing home.

we buy it.. before we even close we have the lots split..  we sell the house for 350k  after putting 10k into it.. we end up with two buildable lots that are worth 125k minimum each.. and we now build two new homes there so we make the delta on the basically free lots and we make the builder profit going vertical.. they use me as a capital partner so the builder / has no cash into the deal..  and profits will be about 200 to 250k in less than one year.. we do a profit split on that .. with us taking less than the builder..  so for him huge homerun on OPM.. for us we do quite well on our capital.