About two weeks ago I walked out of my latest job and about five hours later walked into a real estate office to sign some papers and pickup the deed for my third house. It’s another bank-owned foreclosure in need of lots of rehab. It’s a 3 bedroom, 1 bath single family home built in the 1880′s in a fairly urban area but with a large (for a city-house) fenced in yard and a paved driveway. The neighborhood is so-so, with a mix of other single family homes and a few multi-unit dwellings. There’s city water, sewer and gas service in place.
I’ve ordered replacement windows for the entire house (~$2,500). It’s going to need new flooring throughout, paint, and the bathroom looks like it was designed in WWII. So I’ll be redoing the shower and installing a currently-missing bathroom sink. The good thing is that the roof and siding look to be in fairly good shape. Though there is a front porch that has me a bit worried and I still haven’t decided if I’m going to replace it or try to repair it.
This one should take me 3-4 months to fix up at a leisurely pace. Maybe less if I’m more diligent about it.
I ought to be able to rent it for $900-$1,050/month or so. I tend to keep the rents a bit on the low end so that I can have my pick of tenants and they’re less likely to move out because they found a better deal.
The negotiation for the house was a bit prolonged. When I first checked it out over six weeks ago the asking price was set at over $40k and I had better prospects I wanted to make offers on first. But those didn’t pan out, and about 4 weeks ago the asking price dropped to just over $30k. So I decided to make an offer of $17k.
My real estate agent does all the negotiating for me, which I’m grateful for, because I hate negotiating. I told her my ceiling was $19k. The negotiation went back and forth for four days. My agent would go up a hundred bucks, they would come down two thousand, over and over again until finally they agreed to $18k. I just went about my business not thinking about it until my agent called me 4 days after I made the offer to tell me she had made a deal. She doesn’t update me with every little thing along the way, which I’m grateful for because I really don’t care how she gets there, just tell me the final number.
I’m quite happy with the deal. To get something for less than $20k around here that isn’t a complete tear-down is a real coup. I can definitely keep the repairs under $10k and I’m hoping to keep them somewhere around $7k, counting my own labor as free.
Once this one’s rented out I’ll be bringing in about $1,700/month in gross rents, still with no mortgages to pay on.
Hopefully I can grab up a few more in the coming year while the market’s still low. But we’ll see. I have plenty on my plate for now.