House #33 – A Two-Story Rental That Gets Us to 1 Million Net Worth

by Stealthy Rich · Published July 18, 2020 · Updated August 9, 2020

July 2016

25107 Artesian Chuckhole

The acquisition of house #33 was entirely typical for The Stealthy Rich. Yellow Letter, buy with cash, rehab a month later. BRRR style. This property was located in Spring, TX, and was built in 1980. It has about 1900 square feet with four bedrooms and 2.5 baths. It also had a decent sized yard and backed right up to an elementary school. It was perfect. We mailed a yellow letter to this owner who was renting it at the time. He was in between renters and was ready to part with the house. It didn’t need much rehab either. The only downside was that it was two stories. We don’t like two stories as it means roofs are higher, which means more expensive to replace, and if there’s a plumbing leak from the second floor, that means you also have a problem on the first floor. However, we will still buy a two-story if the numbers are right, and they were so right on this one.

We got it under contract for $105,000, probably worth $145,000 in 2016. Huge win for us.

Initial HUD Statement

Rental House Rehab

On this house, we just needed to do light sheetrock work and touch up paint. It wasn’t our standard color, but it wasn’t hideous. We fixed some drywall, a few doors, and then touched up the paint. We also ended up having to replace the electrical panel. It was the original breaker box from 1980. Here are the rehab costs.

Expense Item	Amount
Rehab Materials and Labor	$1050
Yard	$80
Plumbing Clean Out	$125
Make Ready Clean	$150
Electric Update	$1000
Utilities	$142.12
Interest payment	$525.54
Total	$3405.66

ReFI HUD

On this one, we just pulled out $105,000, which gets all of our initial purchase price out. Our only money in this one is the rehab costs.

Rental House #33 Pics

They are pretty lame, we haven’t had to refresh it yet, so these were the original pics we took.

Cash Flow Update in 2020

Since we bought this house in 2016 and are now just reporting on it, let’s look at how its performed over the years, using our very own Cash Flow Tracker.

We had one tenant change over, where we replaced the floors and painted. We also had a significant plumbing issue where the sewer line backed up. We needed to replace a section of pipe in the back yard where it had “bellied.” A belly is where the sewer line bows a bit, and instead of going downhill to the sewer, it collects stuff and eventually causes a clog. This situation happens with time as dirt settles and causes the pipe to move.

We’ve paid down $13,431.69 on our $105,000 loan, and we’ve made over $5,700 in free cash flow. Plus, the property is now worth over $185,000. And we’ve paid zero tax on any of income because of expenses and depreciation. #Winning.