I purchased my first potential flip property back in March. I have not mentioned it at all yet because I’ve been so busy. It was a bank foreclosure in a nice gated neighborhood. It had been on the market nearly a year. The carpet was ruined, the A/C was broken, it definitely needed paint. The shell of the house was great and even the repairs weren’t substantial.
The property was listed at $160k. In fact I was looking at the property earlier and had planned on making an offer but it got an offer and was under contract before I was able to. I continued looking at properties and my realtor informed me after two weeks that the buyers weren’t going to be able to get financing on that forclosure property. So I swooped back in.
I made a low-ball offer of $120k thinking the bank was going to come back higher. They accepted the offer for the house as is. I went ahead and closed on the property. The appraisal came back at 165k. I immediately had 45k in equity minus repairs before a down payment.
The House: 3/2 , 1800 sq ft.
Here are the purchase numbers:
Purchase Price: $120,000
Down Payment – $30,000
Closing Costs – $4,292.20
Flooring – $3,780
A/C – $1,500
Plumbing – $320
Landscaping – $200
Total Cash Costs – $40,092.20
Rent/month – $1400
Expenses/month – $1161.09
Cash on Cash return (before m/v) – 11.66%
Cash on Cash Return – 7.62%
Here are the numbers:
Appraised Value: $165,000
Principal Balance: $90,000
Total Equity: $75,000.00
Hazard Insurance: 82.67
Property Taxes: 330.53
Expenses – $896.34
Estimated Vacancy & Maintenance (10%): $150
HOA Fee: $114.75/mo
Total Expenses – $1161.09
Current Rent: $1400 (Leased until 05/31/19)
Monthly Profit – $238.91
+ additonal $?? going to equity each month
So I have $75,000 in equity with $40,000 out of pocket and a cash on cash return after all expenses and estimated vacancy/maintenance of 7.6%. That’s not too bad. The 7.6% is a little lower than I’d like, I originally had the property listed for $1500 and had someone back out at last minute. At $1,500/month rent it would be over 10% COC returns. I dropped the rent to $1400 and rented it the next day. I was really picky on tenants though. I feel like I have gotten some good ones that will take care of the place.
All properties are fully rented! I can finally breathe a sigh of relief as it took a little while to get #3 fully rented.
TOTAL Monthly Net Profits on all rentals:
#1 – 306.48 (leased through 06/30/19)
#2 – 751.84 (leased through 09/30/18)
#3 – 510.13 (leased A through 04/3021 & lease B through 02/29/20)
#4 – 238.81 (leased through 05/31/19)
I keep track of my rental property cash flows on my real estate page here: http://www.allaboutinterest.com/real-estate