Purchase price: $275,000 Cash invested: $45,000 Sale price: $410,000 Contributors: Adam Schooley This townhouse, which had gone through probate, suffered from significant water damage to the drywall and required updates throughout.

Otherwise, you will likely be copying someone else's false expectations.I have reviewed hundreds of such self-constructed logs, and most of them will not hold water.

Unfortunately - my current lot for my primary is 1 acre and VERY sloped, and close to a water source (creek), so the county has not even allowed me to permit my downstairs finished basement without an extremely costly renovation to our septic (over $60,000, and that doesn't count demo'ing and replacing our driveway to get to the existing tank and leachfield), and even if I could permit it, it would essentially need to be a treehouse in the redwoods due to the slope (not a bad idea though, I would actually love a livable treehouse on this lot!

In case I have to sell or I quit running STRs I wouldn't want to be under water out the gate.

For example we replaced a water heater recently.

Their home has been vacant for over 4 years and is uninhabitable as the city water dept cut off service due to a faulty septic system spilling sewage in both our backyards.

So adding this to my prospecting plan may provide reach to do deals that I may not have had before simply circling the usual watering holes.

Principal Paydown: $2,441 Total Gain: $58,317 ROI: 360.32% (on $16,185 upfront investment: 3.5% down payment of $8,715 + 3% closing costs of $7,470).Year 2 Analysis Cash Flow: -$752 Home Appreciation: $6,120 Principal Paydown: $2,617 Total Gain: $7,985 ROI: 49.34%.Year 3 Analysis Cash Flow: -$375 Home Appreciation: $6,242 Principal Paydown: $2,806 Total Gain: $8,674 ROI: 53.59%.Year 4 Analysis Cash Flow: $9 Home Appreciation: $6,367 Principal Paydown: $3,009 Total Gain: $9,386 ROI: 57.99%.Based on these numbers, you’d have negative cash flow for the first three years and only break even in Year 4, assuming a 2.5% annual rent increase.Adjusted Scenario see second picture: Landlord Covers Gas and WaterIn the second scenario, I assumed the landlord would pay for gas and water at $300/month while maintaining the same 2% home appreciation rate.

That's easy compared to trying to fight and erroneous $13k water bill (a real issue we had) or an insurance policy tripling (that too).

Utilities are OFTEN overlooked so reach out to power, telecom, gas (or go all electric), water, and sewer to make sure you understand what it would take to get separately metered services from the primary house.