Rental Property Number 7 is Rented

Photo Jun 29, 4 21 20 PMWe rented rental property number 7 last week.  We advertised it for $1,400 a month and had three applications in the first day after it was on Craigslist.  We choose 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.

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.

Numbers

Cost Basis

Purchase price  $113,000

repairs                 $9,000(we had a few other small items)

Closing costs      $2,000(after $2,000 concession)

Commission       -$3,390

Mortgage              $1,080

Utilities                $500

Total cost             $122,190

Cash into the home

Down payment    $22,600

Closing costs        $2,000

Mortgage               $1,080

Utilities                    $500

Commission         -$3,390

Repairs                   $9,000

Total                        $31,790

Cash on cash return

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.  For the first year my rental income will be about $10,200 and that equates to a 32% cash on cash return!  I’ll take that any day!

What’s next?

I am chilling out for the next month or two at least.  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 renal number 7 on MLS in the last 6 months.

Related Articles

My rental properties

Video of rental property number 7

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13 responses to “Rental Property Number 7 is Rented

  1. congrats
    30+ COC return – well done –

  2. Great work, just found your blog this past weekend and read almost every post you made, great insight and inspiring. My goal was ten in 7 years after reading your 100 goal makes me want to revisit my goal. 🙂 . Good luck in your new house purchase. Btw the pix post here I think might be from your previous rental. Cheer!

    • Thank you! I am glad you enjoy the blog. You are right I put a picture of rental number 6 instead of 7. I just fixed it. I figure my goals should be challenging enough that they make me come up with new ideas and ways to improve things.

  3. Wait a minute….

    What about t
    repaircosts in the long run? Coc will not be 32 % then… …Does the renter pay utilities ABOVE the 1400 in rent? On a 113 k house? Seems to be buy of a lifetime then…

    • Yes, in the long run there will be repair costs. The home is repaired now and I assume no repairs in the first year. That’s why I calculate first year cash on cash return. I mention on some of my other properties that the next years might not have quite as good of returns do to repairs or vacancies.
      Yes, tenants pay all utilities on top of the $1400 a month. Taxes and insurance are included in my mortgage payments and their is no hoa.

  4. Congratulations!! May I ask what if the average price of the house in the area I lived is not able to meet your buy-in requirement because of the incredible appreciation for the past five years?
    I’m from Taiwan and the price here has been going up like the rocket for the past five years.
    Five years ago, I can find houses which meet your buy-in requirement for long-turn rental property.
    Now, there is no way to find these kind of properties, even it is a lot cheaper than the market price.

    • Hi Scott, Thank you for the comment. The average price here is around $170k now. I have talked to many investors who have the same problem as you do with prices much higher than mine. It is difficult, but it may be worth it to look into long distance investing. FYI, I have a listing in Denver under contract right now to some investors from Taiwan.

  5. Pingback: I Thought I had Rental Property Number 8 Under Contract | Invest Four More

  6. I love reading your blog, its so inspiring.
    Can you tell me why you advertise your rental properties on Craigs List versus putting it up for rent
    on the MLS. I realize there is a fee of half a montth’s rent for the agent that finds the tenant ( assuming you have a licience), is this the only reason.

    • Hi Wendy, I think this varies widely depending on your market and local customs. Very few people use our mls to advertise rentals unless they are commercial. Most renters around here do not use a realtor to find rentals, they search themselves. Craigslist is the most popular place for rental listings here. I have never had a problem renting anything just using Craigslist and a yard sign.

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