House #24 Rehab for a New Buy and Hold Rental House

June 2015

Rental house #24 – 2015 Cheever Din Pricker

OK, guys get ready, we are about to go a tear here as now we have a self-sustaining rental house machine that is churning out a decent amount of cash each month and allows us to replenish a fund for a down payment on a house in no time. This property is the first of many “buy and holds” in a row.

We hadn’t bought in almost a month, so we were ready to go again. At this point, it’s becoming an obsession for me.  I’ve entirely given up on the stock market minus my retirement accounts. I’m all in on real estate. Each property gives us cash flow, tax shelters, potential appreciation, and amplification of return through leverage. I can’t believe how well it’s working so far.

This time we found 2015 Cheever Din Pricker off the MLS. Yes the MLS. Once in a while, you can find a deal, and this time we got lucky. It was a company that had bought it tried to flip quickly. It was 1680 square feet with four bedrooms, two baths, built in 1982 (perfect house for The Stealthy Rich). It was in a prime neighborhood, in fact, the same community as House #19. Perhaps too “rich” for our liking, but we decided to pull the trigger anyway. We got it under contract for $115,500. This amount is the most we have ever paid for a house yet, but also the best neighborhood thus far. Let’s see if it pays off.

Here’s the HUD

Not so Perfect Rehab

We knew this house had a few issues. For example, when you walked through the living room, you felt like you were walking downhill. A quick call to our foundation guy who helped on House #4  and we were in business for about $5,000. He added a bunch of piers, and we were good to go – problem solved. Next, we needed to repair the drywall from the shifting of the foundation as well as paint, floors, and counters. We decided to try somebody new this time. IT was a BIG strikeout.  This dude essentially moved into the house and “started” working on it. Keyword in that sentence, “started.” Dude was shady. Plus he was slow and didn’t communicate well.  The whole thing was bizarre. We finally got him on his way and then put the house back together using our regular guys for granite, floors and make ready. Below are the finished pics and the list of the costs required for this rehab.

Finished Pictures of Rental House #24

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Rehab Costs for Rental House #24

As you can see, we track everything from countertops down to a microwave part. We want to be exact as possible to know how these assets are performing once we get them rented out. Unfortunately, we had a few big ticket items on this one including HVAC, foundation, appliances and all new countertops. Hopefully, it will be good for a long time.

Let’s Do The Numbers

Once it was ready to go, we found a qualified tenant and got it rented for $1,495. Highest rent we had ever charged. The market continues to climb, and rents are pushed up. All in on this house was about $137,000. With a rent of $1,495 that puts us at a Rent to Price Ratio of 1,495/137,000 or 1.1. This deal is a simple base hit, but we will take it. Almost everything in the house is new, and the appreciation potential is high as the neighborhood is the best we’ve ever had. Hopefully, it will pay off in the long run!

Net Worth Update

Let’s see where we stand on our journey to $1 million in net worth!

We did quite a bit of updating of our numbers at this point in 2015, checking market values of all 24 houses prior and also I got a new day job this month as well so the figures start to take off at this point. The real estate snowball is real. We were shocked how much had changed, for the better. Get ready for a bunch more of these but with even juicier numbers!