Two years ago with no real estate investing education other then watching TV shows I bought my first single family home aka the Handy Man Special. I didn't know what ARV was, I didn't know how to calculate cash flow. All I knew is that I could use sweat equity to build my wealth and I had the confidence to do the renovation. I'm a very handy guy and a good friend to have when you need something fixed or a picture hung up at your grand mothers house. I just had to get their on my bicycle.
A little about my self; I live in London, Ontario Canada. I'm currently a Carpenter Apprentice and I will have my 7200 hours logged by this winter to become a Journeyman Carpenter. This just means I have a lot of hours renovating basements, building decks and fences, roofing, hanging doors and assembling beds for seniors. I worked with a subpar General Contractor for the last 5 years, initially as a laborer then apprentice. The final product always looked good, it was just painful process getting there. I learned mostly how not to do things from working with him. We had a contract with Wal-Mart to be their "Handy Men." We looked after about 100 stores and were on call to fix things in stores. From flooring tiles, doors not closing, fixing drywall that was smashed by angry customers, too hanging up the magnets for the bread knives. Every day was something different to fix. Since I could fix things I thought I could fix up a house my self.
After a few months of searching and putting offer's on crack houses I finnally found a house that fit my criteria, location and price point. It was a single family home built in 1881, 912 square ft on one level with a utility room underneath a hatch in the kitchen. Not a single floor joist is level any more since the house was built on a BRICKWALL foundation. You don't see many of those anymore. The whole house needed some work. This house was a 5 minute bike ride from my house or a 12 minute walk... in the cold Canadian winter time. It had large gated yard with crab apple tree and a delapedated shed that needed to go.
My first estimate on rehab costs was about $7000. I was just going to put new flooring and trim through out, paint everything, landscaping and spend money on the bathroom which needed the most work. Once I started demo I learned alot about old houses and poor previous attempts at renovating. The previous owners did a poor plumbing job and it all that had to go. When i was taking out the old shower I found a WINDOW behind it, which was a good find because i wanted to add a window any ways! Lathe and plaster removal is very dirty work. I found tons wrong with the structure, the plumbing and HVAC inadequacies. There also was no common area in the house so I decided to remove a bedroom, restructure a load bearing wall and add a new beam. All this work needed permits so I went out and got them my self. The whole inspection process took a lot longer then I thought it would. I worked full time during the renovating and only worked on it in the morning before work and after work. So i just left the keys in the mailbox for the inspector and prayed for green stickers when I got back.
I wasn't sure on how the beam would need to be supported so I brought in an engineer to look at the structure and with his suggestion was able to place the beam directly on the old foundation. The crawl space underneath wasn't big enough so I had to dig and wheelbarrow the dirt out my front door, my neighbors thought I was crazy!
Since my only transport was using a bicycle I had to rely on planning and getting lists of all the materials needed and get them all delivered onsite. You also get free delivery with orders over $1500. It would take me about 25 mins ride to get to the nearest big box supplier to get the materials needed so i did not want to forget anything!
I only subbed out the electrical, HVAC, Plumbing and drywall taping (I can tape but not as skillful as a professional) I originally thought the renovation would take about 3 months to complete but it took me 10. It was alot of work to get all this done but I am proud of everything I've done to the property. I still plan on fixing up some other parts of the later on. Once it was completed I was able to rent the property out and it has been cash flowing ever since! The best part of the story is that I used First and Last months rent to BUY A TRUCK! No more renovating with a bicycle!
Here are the numbers
ARV = $145,000
Purchase price = $100,000
Downpayment = $20,000
Repair = $18,539.07 (this doesn't include my 10 months of labor lol)
It's Rented at $1150 (it can get 1300)
Mortgage of $380 a month
Expenses $252.33
with cash flow of $518.71!
Not including cap expense
I'm currently trying to get a refinance and pull my investment out and use that as a down payment for my next property. The whole idea of educating my self on real estate investing started about 3 months ago when I took a real estate guru course! I heard it on the radio and it mentioned flipping houses, something i wanted to do and what really peaked me it was they had clever idea to Finance the projects. All my money was tied up and saving a down payment takes a while! So I took a 3 day workshop course and I learned a lot of things I didn't know about before and how to look for real estate deals. I didn't like the high pressure sales tactics at the end that only cost $50,000 for their platnium level service where an investor flies out and helps you make deals! I thought I could use that 50,000 for making my own deals. I was inspired and motivated after the course though. I posted some of the things I learned on reddit.com because I wanted to give out the information I paid for. Some one replied "Your intentions are great. I hope that the $2000 you spent helps to motivate you and you are super successful in Real Estate. That being said, all of the information you were given is available on Biggerpockets.com. listen to their podcasts. Read their blogs. If you feel like you need/want to pay for more guidance when you are done, by all means, do so." Since that day i've gone through almost 100 pod casts, bought and read the flipping book, estimating rehab costs, and the low and no money down books. Along with rich dad poor dad, e myth, think and grow rich. I've created a business idea and have created a logo and brand, a website and business cards. I plan on being wealthy, my assets will pay for my liabilites!
P.S I have an interesting tale of being a first time landlord with no idea what to do with evicting my first tenants...
Now for video walkthroughs!
Before Renovations
After Renovations
A Link to 200 pictures, sorry for so many!
Bathroom Before
