We rented rental property number 7 last week (7/1/2013). We advertised it for $1,400 a month and had three applications in the first day after it was on Craigslist. We chose a family who had the best references and rental history. They had rented their previous house for 5 years, but the owners were selling it so they had to move. They aren’t moving in until July 20th, but that is better than moving in August 1st, which is what I was afraid of considering we did not advertise the house until July 2nd.
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Rental property number 7 is going to end up being a great investment! I purchased it for $113,000 with the seller paying $2,000 in closing costs and it needed less work than most of my other rentals. We paid our contractors about $4,600 for paint, exterior repairs, some interior repairs and sprinkler system repair. We paid about $3,500 for carpet up and down and we did not need to install new vinyl. We were planning on selling the wheel chair ramp that came with the house, but we decided to donate it to a family who was recently in an accident and the father ended up in a wheel chair.
What are the numbers on rental property number 7
Purchase price: $113,000
Repairs: $9,000(we had a few other small items)
Closing costs: $2,000(after $2,000 concession)
Mortgage Pay: $550
Total cost: $121,660
Cash into the home
Down payment: $22,600
Closing costs: $2,000
Mortgage Pay: $550
What is the Cash on cash return on rental number 7?
We rented the home for $1,400 a month, which equates to $16,800 for the entire year. Mortgage payments, which include taxes and insurance are about $550 a month, which equates to $6,600 a year. I am figuring about $2,500 for maintenance and vacancies in the first year. The home is freshly updated, so it should not need too much maintenance, but you never know what will happen.
What’s next for my rental property purchasing?
I am chilling out for the next month or two. I am buying a new personal house, which closes in two weeks. I am then selling my current house to my friend, who is moving to town to start working with me. He just put his house up for sale and received a cash offer in less than a day. Once these sales are taken care of, I am going to start looking for rentals more seriously. However, my biggest issue may be finding a great deal. I am spoiled after this one, and I have not seen anything remotely close to as good of a deal as rental number 7 on MLS in the last 6 months.
I will keep looking and even if the deals are not quite as good as this one, there are other properties that would work out as great rentals.
Update in 2016 on rental property number 7
A couple of years later, this house has been great. The same renters are in it that first rented the home. They are still paying $1,400 a month, which is below market, but I have not had to make any repairs and they almost always pay on time. I was able to refinance the home last year and it appraised at $195,000! Not bad considering I paid $113,000 for it. After the refinance I was able to take all the cash out that I used to purchase the property and buy more rentals with that money.
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.