8 Replies

How I made $112,000 on the sale of my rental property that I purchased in 2007!!!  

Purchase (2007): $165,000 

I lived in the house for 5 years, renovated kitchen, baths, and converted a screened porch into a bonus room  ($30,000/150hrs of my time).   Moved to Seattle and rented the house out to a great tenant (until he caught the back yard and my neighbors fence on fire!)  Moved back into the house for 18 months, fixed a few more things, then moved into our second home and rented the house to a "friend" (bad idea!).  Only a bad idea because my gut told me not to trust him, but I did anyways and lost a few thousand dollars  (humbled), then I improved my tenant screening methods, picked a very qualified tenant and had a great experience- because I took the time to be professional, raise my rent, got more proactive and clear on my expectations (wiser now).   After all expenses: I profited $11,800 in rent over these 3 tenants, who also paid down my mortgage (approx)  $30,600.

Got my real estate license earlier this year, then without knowing anything about how to list a home, took some pics, wrote a nice description and sold the house for:  $265,000- realizing a profit of $112,000.  By having my RE license I saved $7950 on the sale.   I could have sold the house 6 months earlier with an agent when the market was not as hot but only have made $50,000.  Couldn't have done it without my awesome team, @Chris Flynn, and my amazing wife!!!!  (our three kids also helped in their own way. ha)

Lessons learned: 

-Be ultra clear on your expectations to tenants and contractors.

-Never let doubts, fear, people's opinions or the pain of losing money creep in and steal your joy.

-Buy low, fix it on a real budget and sell high

-Don't rent to friends, family or anyone you don't trust

-Don't do business with arrogant people

-Stay the course, get laser focused and stay the flipping course!

Erik, great post! Thanks for sharing about the journey through the ups and downs. Way to push through and make a great profit from it!

This is a simple yet amazing story about perseverance and not giving up. Thanks for sharing!! 

It is a great story. But let me ask this. Why did you sell? You made 112k plus another 10k in rental income over 3 years? Why not hold on to that sucker for another 20? 

If that house was worth 265k today, what would it be worth in 20 years? 500k?  And how much rental income would you get from it? 

Of that 112k profit, how much did you pay in taxes? 

I think a 112k profit is probably worth pulling the trigger on. But I'm curious why you did. If you needed cash for more deals, you could have just as easily taken out a heloc and gotten a chunk of money that way instead and kept the house/money tree.

"-Don't do business with arrogant people"

Couldn't agree more. 

Those are great lessons learned. Thanks for the inspiration!

@Mike H.   Thanks for the questions!  I sold for several reasons:

1.  Tired of SF rentals- moving toward MF
2.  I (hope!) avoided capital gains since I lived the home 2 of last 5 years

3.  I like to see my name on yard signs.  ha-

I did consider the Heloc option, but I have one on another home, and really want to flip houses then buy MF rentals- more scalable, easier to manage.  

Originally posted by @Antoine Martel :

"-Don't do business with arrogant people"

Couldn't agree more. 

 Thanks for the note!  I should have added to my lessons learned- 

"Don't give into or do business with arrogance."

  I think arrogance is like a jacket we wear and it ruins everything good that we can accomplish.  

I heard a great podcast recently from a great friend - @Paul Moore "How to lose money in real estate" that said:

" Don't mistake success for a bull market.  "

What lessons have you learned recently?

Originally posted by @Wes Woodhouse :

Those are great lessons learned. Thanks for the inspiration!

 Thanks Wes!

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