Rental House #41 – The Third in a 5 Property Package Deal

by Stealthy Rich · June 5, 2021

01-2017

Read about House #40 to catch up on our story.

Here’s the story on house #41. Again, we had bought 5 from the same owner, so here we are trying to document what just happened and how we were processing acquiring all these at once. These all came from one yellow letter where we caught an out-of-state owner who was sick of being a landlord and wanted to be done.

2502 Muscled Triathlons – This home has three bedrooms and three baths and was built in 1998. It has 1700 square feet. The downside to this one is that it’s a little separated from the rest of the farm, and it has really high taxes (compared to our others). It will still make a decent rental for us.

Also, we actually never got to see this house before we bought it. We went over and peeked in windows, but nobody would ever let us in. The tenants smoked a lot of weed and were not very tidy. No worries, at the price listed below, it made perfect sense to proceed.

BRRRR METHOD

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. House #40 was a perfect flip for us, as it was empty and in a desirable area. This property was in a good HOA neighborhood, it just had high taxes, and we think the floors were shot.

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. For this property, the allocation was 90k.

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 needed every ounce of cash to make this deal happen.

Here’s the initial HUD for this massive deal.

Rehab

This property required no rehab as it had a tenant already living in it. This is the way to do it. HOWEVER, we did spend about 11k about 2 years later when the tenant moved out. Here’s what we did

Replaced HVAC
Repainted with Mindful Gray (SW7016)
All new floors
Powerwashed
Re-sodded front yard to pay HOA ransom. 🙂

Post-Rehab Rental Pictures

Rent

After we got the house ready, we rented it on the MLS for $1353. That’s a rent to price ratio of 1.34 (1353/ (90k+11K rehab). We have good long-term tenants, but with the repair costs and high property taxes, you can see that the house has been a total boat anchor for cash flow… Sadness. Luckily we have very little money in this deal. Probably 6k total and the house is now worth 194k. We should probably sell it.

When we first bought this house, the tenant was paying $1150. 4 years later, we are getting $1353, with another rent increase coming in September 2021 if we don’t sell it first. That’s an 18% increase in rent.

Refi

Here’s our Refi on this property. BRRRed it out for 95k. That means the bank thought it was worth at least $118,750 (80% LTV). After the rehab we will do a few years later (in 2019), We will only have about 6-7k in this deal. This is BRRR to perfection. Now time to repeat it yet again.