The fix and flip business has occupied most of my time and attention lately as I have found many great deals this year. I have still been watching out for rental properties to purchase, but I have seen very few good deals come along that meet my criteria. Late last week I saw a great deal come through that fit my criteria for a rental property. The property was listed on a Saturday, and I didn’t see the home pop up on my MLS hot sheet until Monday. I quickly made an offer and was informed they already had multiple offers on the home. I made the best offer I could, and I was lucky enough to get the home under contract!
For more information on my rental properties, check out my complete guide to purchasing long-term rental properties.
Rental property 11 house characteristics
Rental property 11 is a ranch home with a finished basement built in 1960 with 3 bedrooms and 1 bath on the main floor and 1 bedroom, 1 office and a bath in basement. The house has 972 square feet on each floor, has a mostly brick exterior and is in decent shape, but has not been updated for a long time. The baths, kitchen and windows are all very old, but for a rental I may be able to use them still. The home also has a large detached two car garage that is over 500 square feet. The house has carpet on the main floor, but underneath the carpet is hardwood. I am going to have the interior painted, some work done on the baths, new counters put in, the hardwood re-finished, carpet put in the basement and some other minor repairs done.
What did rental property number 11 cost?
The list price on the home was $94,500, but that is not what my offer was. I will give all the details on what I paid after the home closes. Since there were multiple offers on the property, I made a very strong offer with no inspection or appraisal contingency. If you look at rental property number 9, I paid over $130,000 for that home and I thought that was a great deal. I was definitely willing to pay more than $94,500 for this one. Here is a great article on how to win a multiple offer situation.
What will rental property number 11 rent for?
Rental property number 9 has 4 bedrooms, 2 baths total, plus a large office and a large garage and rents for $1,400 a month. I would be very happy if rental property number 11 would rent for $1,300 a month, but I may be able to get $1,400 for it. Our rental market is still going crazy with vacancy rates below 2 percent. I also just rented rental property number 4 for $1,500 a month, but it is a 5 bedroom, 3 bath home. Here is an article on how to determine market rents.
What will the cash flow be on rental property number 11?
I am going to finance rental property number 11 with my portfolio lender. I will be using a 5 year ARM with a 30 year amortization and I have to put 20% down. I won’t tell you the exact price I am buying the home for since it has not closed yet, but using my cash flow calculator I will have about $400 to $500 a month in cash flow. That figure includes money for vacancies and maintenance on the home.
Future plans for rental properties
My goal was to buy 6 rental properties in 2014 and I have bought 2 so far. Rental property 11 will be number three and I will be slightly behind my goal. However, I am way ahead of schedule on my fix and flips. I currently own 9 fix and flips that are being worked on with one on the market and another under contract. A lot of my money is tied up in the fix and flips and it will be tough to buy another rental property until I sell some of those flips. I also have another fix and flip under contract that I just found through direct marketing. I will have ten fix and flips at the same time in a few weeks, and I think the most I have ever had before this year was 8.
Once I get some flips sold and more capital coming in, I will be able to buy more rentals later in the year. That is if I can find some good deals to buy!
Having trouble finding a great deal on a house? Check out my book How to Buy Real Estate Below Market Value, which describes how I buy 10-15 fix and flips a year as well as multiple rental properties. The book is available as an 113 page E book on Amazon or as a PDF here.
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.