On July 3, 2016 I read Robert Kiyosaki's book, "Rich Dad Poor Dad", while at the beach and spent the rest of my vacation researching rental properties. That summer/fall I researched and read books and listened to podcasts and webinars like a crazy person. I was checking the MLS multiple times each day.
Finally, in November of 2016 I came across a foreclosure about 2 miles from my house and immediately made an offer on it. Thus begins the most drug out and slowest process of my life. a) it was a foreclosure so we had to deal with a random bank/company and b) the listing agent sells real estate as a retirement hobby so it was nearly impossible for my buying agent to ever get in touch. Working with these two awful communicators was a horrible combination.
First, the bank set a strict deadline that we had to close by. This meant that I had to schedule an inspection with 5 days notice around the Thanksgiving holiday. It also meant I had to get a rush appraisal which cost me $500. I held up my end of the deal but the bank never signed the contract by the deadline they had set so we had to draft an addendum extending the closing.
Then was the water issue. There was so much miscommunication on if the water was turned on or not. We could tell it wasn't working on our end but the town assured us it was on. We found out that the line had been broken while the road was being repaved. Getting that fixed delayed closing even further. However, to get the closing extended, the bank had to sign the new addendum each time which was like an act of Congress.
Finally, after so much stress and back and forth with amendments, we closed on Feb. 17. We went from an original close date of late November to mid February.
This house qualified for Freddie Mac financing so when I originally locked in the rate I got 30 years @ 4%. However, since the closing took so long, I lost that rate and ended up with 4.75% for 30 years.
The house had been vacant for 2 years but was in surprisingly good condition. The paint colors were awful and the kitchen was a dark cave with paneled walls and homemade cabinets but it was still promising.
BEFORE PHOTOS
AFTER PHOTOS
My fiance (at the time of renovations) now husband, did ALL of the renovation work. I did do the cleaning and most of the painting though. Let me tell you, it took a LOT of paint to cover up those bold colors. It took a coat of kiltz and two coats of paint + primer to cover it all up.
We started work near the end of Feb. and are almost finished as of today. We had a wedding and honeymoon to plan/attend so that took some time.
Now for the numbers!
I recently got a June 1 lease signed and have already collected the first month's rent + deposit.
Purchase Price: $55,000
Down Payment: $11,000
Closing Costs: $4,585
Rehab: $5,712
Monthly Rent: $765
Mortgage payment (PITI): $336
10% Maintenance Fund
Annual Cash Flow = $4,226
Cap Rate: 12.68%
Cash on Cash: 19.85%
ROI (incl. cashflow & principal paydown): 23.03%
On to the next one!
