Rental House #28 – Another Winner of a Rental House
January 2016
29107 Dogtrotted Linens
We are starting the new year with a bang. We had a fantastic holiday season, and it had been only THREE days since we closed on house #27. We found House #28 (29107 Dogtrotted Linens, off the MLS of all places. If you want a deal, you have to know where to look. We get reassess from all kinds of situations, yellow letters, wholesalers, and yes, even sometimes off the good ole MLS.
We check the MLS every day, and on this chilly day in November 2015, we found a winner in this property and decided to make an offer. The house already had a tenant, and they were paying on time, and it was smack dab in the middle of the best neighborhood in the “farm.” After a little back and forth, we settled on $101,000, and it was accepted.
Luckily with this house, it was already stabilized and had a renter, so there’s not much to tell on this one. After we closed, we called and introduced ourselves as the new property managers to the tenants and made sure they knew where to pay rent now.
Financing This Rental Property
Since this was an MLS purchase with a tenant, we decided not to do our classic “BRRF” strategy. Instead, we called our bank immediately and asked for a loan for the purchase of this bad boy. We decided to go for 15% down on this one to help minimize the cash needed to close. So on a $101,000, this means we received a loan for $85,850. See the below HUD as after fees and other credits; we needed to bring $13,485.56 to closing. The interest rate was 5.125% for a 20-year note with a monthly payment of 576.06
HUD
Rental House Pics
Now we don’t have pro pics on this one, so these are the best we’ve got. It’s 2019, and we have the same tenants in there. We’ve also replaced a water heater, faucets, and the floor in the master over the last four years.
Let’s Do the Numbers
This house rents for $1,100 in 2016. That makes this house a 1.1 rent to price ratio. But we quickly raise rent to 1200, which increases it to 1.2. With a 576 a month note, that leaves 1200-576 = $624 to cover taxes, insurance, and expenses. In reality, this provides about 200 dollars a month cashflow for us. Awesome.
Net Worth Update
Using our fancy net worth tracker, here’s where we stand after House #28. We upped our real estate values after this one, as each year, we reassess what all the houses were worth. I also paid cash for a minivan, which hurt but needed, so my cash position is less than usual.
