Rental House #27 5614 Relevant Dying Drive – Best Rental Property Yet.

January 2016

The Stealthy Rich were still on a high from buying house #26 because we had finally figured out how to get houses with zero of our own money. We wanted to repeat that transaction a hundred times. This was it! Our ticket to scale this idea of real estate. We had to pursue it. SO, we ramped up our yellow letters and focused on each lead we got from the letters, and networked with more and more wholesalers trying to buy properties below market value.

This deal came from a wholesaler. We became friends and were on his deal list. 5614 Relevant Dying Drive was one that he offered to us as he had recently got it under contract.

$76,000. That was it. It was a three-bedroom, two-bath house with 1,650 square feet built-in 1978. For this price, we couldn’t pass it up. We found out later the wholesaler paid $45,000, but we were still getting a fantastic deal and the numbers worked.

Buying – Short term Financing

We decided to allow another one of our friends to be a “medium” money lender on this deal. He lent us  $50,000, and in return, we signed a promissory note promising to pay, and as collateral, he got the house if anything crazy were to happen. Shortly we then closed for $76,000 using about 26k of our own money. Here’s the “first” HUD below. Get excited to see the next HUD on the long-term finance further down because that is where the magic happens. The $32,363 fee includes the assignment fee to the wholesaler. It hurts a little to see that, but it was the only way we would’ve found this deal.

Additional Costs and Repairs

After we purchased rental house #27, we quickly started work on it to make it livable for a tenant. We immediately determined the whole HVAC system needed to be replaced (furnace, evaporator coil, and condenser), that was 4k. Fun times, but we get a 10-year warranty with it. We also replaced the carpet and painted everything. Adding in the interest payments to our friend for the three months our total repair/cost bill came to $7,373. This means we were in this house now $77,492 + $7,373 = $84,865

Long Term Financing – March 2016

Now for the fun part. Time to get all of our money back out. We contacted our new favorite bank. The one we used on House #26. They were happy to do business with us once again. We presented this house to them, told them we needed a loan on it, so they appraised it, and determined it was worth $112,500.

Amazing.

This amount meant we could borrow 80% of that amount or $90,000. We only paid $85,000. So, yes, we made 5,000 extra in cash flow from this deal. This deal is about as good as it gets — time to find ten more just like it.

Second HUD From Long Term Financing

Finished Rental House Pics

Sadly we have no pics of this one. We have a good reason we don’t have pics because we found a tenant immediately from a referral from another current tenant. She moved right in so we didn’t even need to take pictures of this one. All we have is this picture of the front. (She’s still a tenant as of 2019 when this is written, so we don’t have pics even now.)

Net Worth Update

We added about 25k on net worth on this property. Getting ever closer to the 1 million mark. Stay tuned for House 28.