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.