From 2 Units to 6

It's been 3 years now since we moved back and found ourselves as landlords and I'll be the first to admit that we probably have had it easier than most. We've had amazing tenants who take care of general maintenance, pay on time and rarely call. This year has been our best yet and we've found ourselves with an excess of cash (good problem to have I know!) after saving 30%+ of our income in retirement and other savings. With early retirement on the brain, we began evaluating the best way to get a return on our money without having to tie it up for 35 years when we reach typical retirement age.

Naturally, real estate came to mind. After poking around for a while, we made an offer on a 4 br foreclosure that had been flipped before the last owner. Didn't need any work and would have rented for about $1100. Had been on the market 6 months. It got another offer and they asked for highest and best. We came in at asking (same as our original offer) but the other buyer offered $10k over. 

Poked around some more. Looked at a lot of junky places that needed way more work than we were willing to put in. In early May I happened upon a 4-plex with numbers that looked really good. Looked at it on a Thursday. Was listed at $99k. Made an offer Friday night at 8 p.m. for $92k and they accepted by 10 a.m. Saturday. Inspection went seamlessly, closing had a couple hiccups but we got it done right on the 16th of June, which gave us half a months rent in pocket. 

It has 3 1-bedroom units and 1 2-bedroom unit. Here's how the numbers shake out.

Mortgage is $71,000 with a 15 year note @ 3.6%.

Current gross income: $2000 x 12 = $24,000

Annual Expenses:
Mortgage: $6,156
Taxes: $4550
Insurance: $1600
Utilities: $2,500
1% Maintenance: $240
Net Income: $8,954 or $746/mo.

We have plans to upgrade the units as they turn over, including using the nearly finished attic to expand one of the 1-bedroom units into a 2-3 bedroom. Once all 4 are updated, we should be grossing closer to $3,300 and we will see a positive return much quicker. Now lets see if we can pull off our first renovation and achieve the returns we've calculated.