Our Second Investment Property – Complete
Property #2 was nothing like our first investment.
Our first duplex required 4 times the amount of work, took 3 times as long, and tested us in every way possible. Fortunately, number 2 wasn’t the case.
But with that, makes not very exciting before or after photos. This end unit row home is three bedrooms / 1 bath sitting at just under 1,200 sq. ft. The sellers laid new carpet and repainted all of the walls before listing and was an overall pretty clean unit. We did a few things:
- Refinished the hardwood floors in the living room
- Replaced the appliances in the kitchen
- Replaced the front and back doors and storm doors
- Updated the kitchen sink fixtures and bathroom shower fixtures
- Installed a new washer dryer set
- Installed a new sump with battery backup
- Resided the second floor bump out
- Replaced a few light fixtures
- And fixed a few things like broken window locks, torn screens, and door hardware.
In you read our plans and projections for this property, you know that our original renovation budget was $3,500. But if history is meant to repeat itself, then you know we went over.
The actually renovation costs came in at just around $8,000.
Where Did We Go Over?
3 main areas- the kitchen of course, plumbing (as always), and the siding.
Kitchen
In our original scope of work, we didn’t plan on updating the appliances but we knew switching them out for new stainless steal versions would really set us apart from the other listings on the market. We also feel strongly about setting the property up to be as low maintenance as possible and the old appliances didn’t give us much confidence that a service call wasn’t in the near future.
Plumbing
In a similar vein, plumbing is something we don’t mess around with. We want to ensure the house is in great shape functionally.
This property is also in an area with a high water table and the whole neighborhood constantly has water in their sumps. So to prevent any future basement flooding, we spent the extra cash and installed a larger and stronger sump pump with a battery backup. If a big storm rolls through and the power goes out, we want to trust that our properties and tenants are okay.
Siding
We thought we had some time left before replacing the siding on the second floor bump out but decided to just get it over with now before we have a tenant in place and to prevent any water damage in the future. Doing work like this upfront is ideal as it will postpone any major repairs and lesson the chance of damage done to any of the tenants possessions.
PROPERTY #2 – THE NUMBERS
List Price: $69,000
Purchase Price: $69,000
Taxes: $3,087
Down Payment: $13,800 (20% down)
Interest Rate on 30 Year Mortgage: 6%
Mortgage Loan Amount: $55,200
Closing Costs: $4,000 ish
Actual Rehab: $8,000
PROPERTY MONTHLY EXPENSES
- Home Mortgage: $330.95
- Property Taxes: $251.31
- Home Insurance: $76.33
- Water/ Sewer: Bill back to tenant
- Total Fixed Expenses: $658.59
- 7% Vacancy: $89.25
- 7% Maintenance and Repairs: $89.25
- 10% Cap. Ex.: $127.50
- 7% Property Management Fee: $89.25
We will not be hiring a property management team but one day we might and so we account for it.
Total Reserve Expenses: $395.25
Total For ALL Expenses: $1,053.84
LISTING
We listed the property for rent on Cozy.co, which pushed out to Hotpads and Realtor, and then on Zillow, which pushes out to Trulia. We also posted it on Facebook MarketPlace. Surprisingly, Facebook was the highest source of leads and ultimately is where we found our tenant.
Trying to find a qualified tenant around the holidays and during the Winter definitely created a challenge. We had a lot of interest but by no one who met our rental criteria.
After 126 individuals reached out, we ended up showing the unit to 7 groups, received 2 applications, and finally approved one. We were glad we were patient and waited for a qualified tenant. With renovation and holding cots piling up, it’s easy to feel pressured to approve any tenant nut we knew a tenant can make or break your investment so we held tight.
From date of close to tenant move-in was 62 days. Not a bad turn around time for time of year.
MOVING FORWARD
We are already thinking about our next property, but will be getting our financial house in order a bit before purchasing number three. We know we will be looking for another small multi-family to house hack to take advantage of owner occupied financing and terms.
Until then, we’re going to take a bit of a break and enjoy life together with our family and friends.
