First a little bit of background on the house: it is a 3 bed 1.5 bath cape cod, in an older neighborhood of a class A suburb outside of Milwaukee. It was listed on the MLS, had been bank owned for about 5 years and was tenant occupied. The exterior looked good but the tenant was very difficult and I couldn't get a look inside. I made an offer under the assumption that everything inside needed to be replaced. The bank accepted my offer but refused to deliver the house vacant and after closing it quickly became apparent why. The tenant was a nightmare and after many lies and stories I was forced to evict them and then the rehab began.

Aside from the plumbing and electrical I did all of the work myself. I’m not a contractor but I have a lot of renovation experience and own all the necessary tools.

Basically everything inside both cosmetic and mechanical is now brand new. The windows, exterior doors, siding and roof were all replaced in 2010.

Now to the numbers:

I purchased it with a conventional 20% down loan and conservatively budgeted $35k for rehab. Being conservative I originally planned for a $200k ARV and expected to leave $15-20k in the deal post refinance. In total the rehab itself took 3 months plus 1 month to get it rented.

Purchase price: $132,700

Closing costs: $0 (seller closing cost credit of $2k)

Holding costs: $3k

Rehab costs: $30k

The following was replaced:

All plumbing (supply and drain), including water heater ($4050)
Furnace and Air Conditioning unit ($3045)
Electrical in kitchen and bath ($1800)
LVP Flooring throughout ($2697)
Stair carpeting ($410)
Bathrooms ($1820)
Kitchen ($5095)
Appliances ($1738)
Garage doors and openers ($806)
All new trim and doors ($2168)
Paint ($876)
Remaining costs were miscellaneous supplies, dumpster and permits

The total cash outlay on my part was $57k. The appraisal post rehab came in at $229k so with a new loan of $172k my net cash at the refinance closing will be $64k. Aside from time and labor I now have nothing invested, even will get $7k additional back and retain $57k in equity.

I'm not going to throw out cashflow numbers since everyone tends to calculate vacancy, repairs, capex differently and I don't want to get off track. PITI after the refi is $1160 and it is rented out for $1700. Tenants pay all utilities and handle snow removal as well as lawn mowing. I do self-manage being that it is only a few minutes from my house.

Before Pictures:

During Pictures:

After Pictures:

Hopefully my story can inspire someone. I know some will say that the rent to value ratio isn’t high enough and I’d be better of selling the house. Others will say you have to hire contractors and shouldn’t ever do your own work but I have the time and actually enjoy doing the work (most days at least, lol). It was a ton of work and I sometimes questioned my sanity but in the end this is a deal that works for me and it was definitely worth it.

I’m more than happy to answer any questions or provide additional details.

"Time to find another house to fli"………. Uh BRRRR.

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