Update: 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.
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 an 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.
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 much better shape than most of the properties I buy.
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% 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 investing in long term rental properties.