Rental House #40 – The Second in a 5 Property Package Deal

by Stealthy Rich · Published April 26, 2021 · Updated April 26, 2021

01-2017

Read about House #39 to catch up on our story.

Now we will outline what happened with the second house in that group of five properties we bought from that distressed out-of-state landlord. Dave and I still couldn’t believe we had snagged FIVE HOUSES at once. However, this one was not a great rental by itself.

10035 Aloe Stewy View – This home has four bedrooms and three baths and was built in 2006. It has 2,048 square feet. We ended up flipping this one because, in the end, this didn’t fit our standard for a rental property.

It was a little too big – at over 2,000 sqft, the amount of maintenance for a house this size doesn’t justify the little bit we would receive in increased rent.
It was not in our normal “farm” neighborhoods – Because we got this as a part of house #37, we just took them even though they weren’t located where we typically target properties. This was further from our home base and kind of a dumpy neighborhood as well—so less potential for appreciation.
It was all carpet – Talk about a huge potential turnover cost between each tenant! Plus, at 2000+ sqft, it would’ve been a high cost to change it all.

Buy

We bought this from an owner who was so tired of being a landlord. House #37 had a roof that collapsed. House #39 had a half-burned-down house next to it, and the property we were purchasing had all kinds of rodents because of it. This property just lost its tenant, so the agent wanted to move on. They couldn’t take it anymore! This problem was compounded by the fact that she lived far away in California.

We bought the whole portfolio for $451,600. That’s for five houses. That works out to $90,320 per house in the end; of course, some of them are better than others. We will eventually sell the ones we don’t like. This one, we decided we paid 101k.

The only way we could purchase these with “cash” was to max out every line of credit we had and to ask our rich friends to make up the difference. We had to dig deep to take down this huge deal.

Here’s the initial HUD for this monumental deal.

Rehab

The property needed about 5k to get ready to flip. Here’s a list of what we did.

Fixed a panel in the garage doors
Repaired HVAC
Replaced a few toilets
Fixed dog damage on doors
Repaired the roof
Clean the carpets
Cleaned it thoroughly
Took Professional Pictures

Professional Rental Pictures

Look at all that carpet. Gross.

Flip

After we got the house ready, we listed it on the MLS for $149,000. Almost 50k more than we paid for it. We had a contract 5 days later for 144k. Not a bad way to make a quick 37k, after expenses and closing costs (twice) and get rid of an asset we really didn’t want to keep in the first place.

Remember our flip rule; It’s not set in stone, but if we can get at least 5 years of rental cash flow, then we flip it, especially if it doesn’t align as a rental for us. At $200 per month, that’s $2,400 a year or x 5 = $12,000. We got that triple that ($37k).