All Forum Posts by: Jessica G.

I am a teacher so I'm off work for the summer, and I'm focusing 100 percent on growing our REI business.

I got two off-market houses under contract last week -- a fix and hold, and a potentially lucrative flip. Great news, but I was on the road, on the phone, or on the computer 12 hours a day working on this and expect this week to be more of the same now that we are under the gun to arrange financing, rehab, etc.

This week, we are also closing on the sale of one house and prepping another house to rent -- our first to rent/manage ourselves, so I am also setting up online applications, figuring out our renter criteria, customizing a lease, etc. I am so, so busy.

I have no idea how I am going to do this when I go back to work in the fall, but to cover our monthly costs, I need to have a reliable income. We do have savings, but obviously don't want to rely on that to cover ongoing costs. I would feel better if we had a LOT more in savings, but we don't -- yet. That's why I got into REI on the side, because I wanted more future financial stability.

Our cashflow from two rentals will be about $500/month. We hope to add more rentals as we can find good ones that won't cost much after rehab/refinance.

The flip, which is a huge project, will net at least $20K (worst-case scenario) up to a lot more, but the rehab will take 10 weeks, plus time on the market in the worst time to try to sell a house, and 30+ days to close. The flip house is 3,100 sf (plus barn) on 2 acres, in a thriving small town with amazing schools, easy commute to Fort Worth, purchase price $55K, rehab price $50K (per contractor). The ARV is probably over $200K, but I am using $150K as my ARV just to be safe. The best comp I can find is a nearby house that just sold at $250K, but the house is half the size of ours, with almost twice as much land. Comps are weird out in the country, but I feel very comfortable with the numbers.

My husband has a good job in the mortgage industry and no interest in leaving it, though he 100 percent supports me and helps in every way he can. We are definitely partners in this.

Although I truly love teaching, I have had a really emotionally and physically draining couple of years, and would not mind leaving. I make $50K per year as a teacher, with no hope to ever make much more than that after adjusting for inflation. I take home about $3K/month after paying for taxes and health insurance. The health benefits are pretty good, but I could continue those for 18 months via COBRA for $900/month (GAHHHH). Leaving teaching would also mean losing a guaranteed pension of 60 percent of my income when I turn 55. 

I also have two little kids (5 and 2) and would love to have more flexibility when it comes to them -- volunteering in their classrooms, taking them to the doctor, staying home with them when they're sick.

And here's a weird little tidbit: The doctor who treats me for anxiety thinks leaving teaching and becoming a full-time REI would be great for me and my mental health.

I guess it seems like a no-brainer, but I am really worried about providing for my family if this REI doesn't work out like I hope it will. What if the market tanks when I'm halfway through my flip? What if I pick terrible tenants that put us through an expensive legal battle? I do not want my weird little hobby to financially ruin my family.

I'm also worried about qualifying for financing without a job, but my husband qualifies on his own and has no problem supporting my REI.

I guess teaching for another year or two is an option, but it doesn't feel like one. I am afraid of my attention being so divided between the classroom and dealing with financing, tenants, contractors, etc., that I would be a crappy teacher, the absolute last thing I want.

What do you guys think? Those of you who are still working full-time, are you satisfied with the energy you can put toward your REI? Those of you doing REI full-time, do you make enough money? Are you happy with your decision?

@Steve Babiak

@Steve Babiak If the house needs a new roof -- which it will within a few years -- we will pay for it. We do have adequate reserves, and I don't know why you assume we don't. I just don't want to waste money over-improving a rental house, which seems like a reasonable desire. Thanks for the advice. 

@Mike M. Good point -- this is definitely a mostly owner-occupied neighborhood, That house will be gone by the time we get ours ready, and will no longer be competition!

@Mike Hurney and @Patrick L. 

Thanks for the tips, everyone. We'll definitely look into saving that fence and neutralizing the kitchen paint. You may have saved me a lot of trouble!

We have a property we acquired subject-to existing financing, so we didn't pay much for the purchase. The plan all along has been to hold it and rent it out. It's in a great middle-income neighborhood in a popular, affluent suburb of Dallas. 

We are also considering flipping it to raise capital for our real-estate goals, but that seems kind of like killing the golden goose before it even has a chance to lay an egg.

Anyway, my question is this. The house is in pretty good shape, except some chipped paint, a fence that needs total replacement, some plumbing fixtures. The roof will need replacing in the next few years, but not necessarily today. The landscaping is overgrown and some of it is dead, but I think I can handle that myself? Maybe? We already paid a couple hundred dollars to have a huge dead tree removed from the front yard.

A nice-quality fence (spruce, metal posts) will cost about $2,000 and the plumbing stuff will cost about $500.

We got a quote to paint the whole house while we were thinking about flipping it -- interior paint, trim, scraping, retexturing, and painting the popcorn ceilings, and exterior painting, for about $3,500. 

The paint is in OK shape except for an 8-inch hole in the living room drywall, and some chipping around the window sill where the seller had taped giant plastic sheets (???). The old paint is still in the garage, so I could make those repairs myself, but I know it wouldn't look nearly as nice as a professional repainting job.

The kitchen/dining is painted a horrible BLOOD RED color. And in the kitchen, it's obvious the previous owners painted over wallpaper. There is no texture on the walls and doesn't look good. The hall bath is painted a deep maroon that doesn't look much better. The rest of the house is an inoffensive dark tan.

The floors are OK, but obviously just cheap laminate, basic white tile, and carpet. There is a bit of separating between the boards in the high-traffic areas.

I wasn't too worried about making the house look 100% amazing until I saw this rental listing posted yesterday.

This is our competition: Same subdivision, same house plan, same square footage. They are actually charging a bit less in rent than I wanted to charge. The only things better about our house are a really nice covered deck, a new fence to come, and we are situated on a big corner lot.

So considering that we are already going to have to spend $2,500 for a fence and bathroom stuff, what would you do about the painting? We are just getting started and don't have a ton of capital, and instead of spending what we do have, I want to try to build up that account. But I also want to attract a nice tenant and charge market rent.

Some of the landscaping. There's a lot of dead stuff under some of the bushes.

One view of the blood-red dining room.

Fence that needs total replacement (all the posts are rotted).

Another view of the blood-red kitchen. If you make the picture bigger, you can see that the paint all got chipped away when I pulled the tape off the plastic sheet he had covering the window.

Who needs a mentor?! You guys are holding my hand every day! This is by far my favorite subforum on BP.

@Karen Margrave We do have plenty of discount building supply stores here (Seconds and Surplus is right by my house), and BuildDirect.com ships to a warehouse here, too, so I should be able to get pretty competitive pricing on materials. There are also a couple of Goodwill/Habitat for Humanity outlets nearby.

So I'll do the roof, the floors, the counter, the painting, the fence, and if I have money left for extras, maybe I'll put tumbled travertine on the fireplace surround.

I guess I know the fireplace is the least of my worries, but sometimes it's comforting to focus on something you can control!

@Karen Margrave My budget is "inexpensive without looking cheap." The house probably needs a roof, a backyard fence, new flooring everywhere, and interior and exterior painting, so I don't have a lot for extras. I will definitely put granite in the kitchen and maybe tile the tubs.

This is a nearby sale (with very ugly photos) with the same floorplan from last year, before the prices started really zooming up in the area.

Nearby clone

Here are my numbers if anyone is interested:

Purchase price: $114,000 (no closing costs or financing; acquired as a sub-to)

Estimated fixes: $20,000 (I think this is pretty accurate, as we just had it inspected for the sale)

Holding/selling costs: $10,000

ARV: About $160K

I know it's tight, but I'm new at this. I'm trying to get houses under contract to flip, but I'm having trouble because it's so competitive here. So I figured, a house in the hand is worth two on the MLS.

Hmm, OK, thanks for thoughts. So maybe a nice stained-wood mantel, but leave the tile?

Another question! For paint -- right now the walls are painted in either glossy or semi-gloss paint (not an expert yet) over a heavy knockdown texture. Is flat paint always better for walls in flips?

This is in a house we just bought to rehab and hold, but now I think I am going to flip it instead. What would you do to this fireplace? I want it to look really nice, but not totally out of place in a neighborhood of cookie-cutter '80s houses (all of which have the same tile-surround fireplace). ARV is about $160K, but I might get as much as $170K if it hits the sweet spot between awesome and overimproved. Leaving it as-is is an option too.

EDIT: I'd also appreciate thoughts on accent walls in flips. This house is small, and I've seen listing photos of the same layout looking really tiny without the depth added by an accent wall. But I'm not feeling the maroon.

We just bought a house "as-is" and the seller took almost nothing. He is a geeky guy in his 30s who liked to have nice things. I've been Craigslisting the furniture, and I will be spending the summer on eBay selling all his clothes, tchotchkes and technology equipment. I expect it to pay for most of the rehab costs (it will only be a couple thousand dollars to get it rent-ready). There is some weird stuff. I found a mint-condition 20-year-old Apple MessagePad 2000, still in the box with the price tag still on.

The downside is that it's taking forever to clean out the house, because we can't just have everything hauled to a junkyard. I tried having an estate sale person come take a look, but they will only handle more than $10,000 worth, then take 35 percent.

Are there any real estate agents in DFW who could show me a house tomorrow (Sunday) morning as early as possible? It's in a suburb just north of Dallas. Send me a private message!

EDIT: I've already got someone helping me! Thanks, Bigger Pockets!

UPDATE: We are under contract!