Details on buying rental property number 6
After waiting 6 weeks for a title issue, I finally closed on this property. The purchase price was $115,000 with $2,000 in closing costs paid by the seller. This property was a REO, and priced a little higher than most of my purchases, but the home is in relatively good shape. Here’s a video of the property. The home is a ranch with a finished basement and about 2000 square feet total. There are 3 bedrooms and a bath on the main floor, a family room, bedroom and bath in the basement. The home has an attached one car garage and is only a few houses from a large park.
Condition of rental property number 6
The best part about this property is it has an updated kitchen, updated bathrooms and new windows! The only repairs needed are in the basement. There is a storage room that I am going to expand so that I can have 5 bedrooms total. The basement also needs floor coverings and some other minor repairs. Overall this home is in better shape than most of the properties I buy.
Rent estimates on rental property number 6
As far as the numbers go, this home should rent for about $1,200 to $1,250 a month with tenants paying all utilities. With principle, interest, taxes and insurance, my payment will be about $540 a month. I ended up paying $23,000 and some change at closing for down payment and lender/closing fees. I will be getting back $3,450 for my commission on the sale and hope to spend less than $7,000 in repairs. This property should take less than $30,000 total to get repaired and rented. I should cash flow at least $500 a month which would equal over 20 percent ROI in the first year based off cash flow alone.
For a detailed look at my strategy and my other rental properties check out my complete guide to purchasing long-term rental properties.
Update after purchase
Repairs are in progress. There was a giant gun safe that was in the basement, but we don’t know the combo. I am sure it is worth a lot of money, but so far no luck in getting a hold of the old owner who lost the home to foreclosure. After looking at rents, I think my estimate of $1,200 to $1,250 is too low. I think I can get at least $1,300.
Update on this property after 3 years
I have owned this property for 3 years, and it has been a great rental. I had some issues with the first tenant I put in the home because I did not screen them well. You can read about the story and a few other tenant problems here. The home is now rented for $1,400 a month and has increased in value quite a bit. The home is now worth around $195,000 or more, and I am in the process of refinancing it.
It is a little funny looking back on this article and seeing that I thought paying $115,000 for this house was more than I usually paid. I would love to buy 20 houses just like this for $115,000 now. It is tough to find a house like this that needs work for under $180,000. Colorado’s market is one of the hottest in the nation.
Future plans for rentals
I own 16 rentals now, 15 in Colorado and one in Cleveland. I would love to buy more rentals in Colorado, but prices are just too high to cash flow well. I am currently looking to invest out-of-state and Florida is at the top of my list.
For more information on how to buy the best rentals which will make the most money, check out my book: Build a Rental Property Empire: The no-nonsense book on finding deals, financing the right way, and managing wisely. The book is 374 pages long, comes in paperback or as an eBook and is an Amazon best seller.