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. On saying that, I did decide to take a look at this selection of doors from somewhere like Doors Plus, just in case I could find some external doors that worked better with the property, but I wasn’t in any rush to make this particular decision. One of my friends also suggested that I looked into the services offered by https://www.pestcontrolexperts.com/. Apparently, they could look for any signs of pest infestations, so that was beneficial. No one would’ve wanted to move into a property with pest problems.
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 foreclosure property they found on Auction.com. 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. But there is a part of me that wonders if this figure would have been any different if I went down the investing route instead like a good friend of mine. In all honesty though, I don’t think it would have made that much of a difference because these numbers are better than I ever thought possible. Although, 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: https://www.allaboutinterest.com/real-estate