My First Deal - 2 Years Later
Greetings! I haven't been active on BP for a while because of my intensely busy life in the last year. Wow! How time flies! I just realized that I'm basically at the 2 year anniversary of my wife and I's first investment purchase and wanted to give an update and some lessons learned.
If you're interested, here's the original thread, which I posted just before we bought. Recap:
- Duplex: 2/2, 925 sqft. 3/2 1200 sqft.
- Purchase price: $165,000
- Gross Rent at time of purchase: $1625
- Down payment: $33,000
So! Re-reading my old thread, I can't believe I was whinging about paying $165k. If the market was hot 2 years ago, its on fire now. You can't shake a stick at a cash flowing duplex for under $200k!
We bought the property and got the original 2/2 tenant to move out so we could move in. That cost us $3000 in sort of a cash-for-keys deal. He had absolutely trashed the property, and it took quite some time to get the smell out from all the animal feces and urine.
In August 2016, less than a week after buying the property we left for our long pre-planned vacation to Colorado. You might guess that our tenants had a massive failure of their water heater, which (with no experience and no contacts) I had to coordinate the $1800 replacement from a mountain cabin near Estes Park. Stress. Much stress.
Other than cleaning, we didn't do much to the property, except paint the interior and replaced electrical fixtures, which we mostly did ourselves (I'm not an electrician but youtube is awesome!). We lived in the 2 bedroom side of the property for a year, keeping the current tenants on the 3/2.
In June, 2017 we increased rent from $800 to $850. 6 months after that, we purchased a home to live in (with our 2nd child just 3 months old) and moved out, intending to renovate the 2/2 we'd been living in.
In August 2017, after moving, we started renovations, which (of course) took longer than expected and cost more than estimated. We wound up investing about $5000 for new cabinets, counters, removing some furdowns, etc. almost all kitchen remodel stuff. The renovations took a couple weeks and we got a new tenant very quickly at $950 month, which meant our total gross for the property was now at $1800.
So far so good. Knock on wood.
In September 2017, our original tenants in the 3/2 -- who had never missed a payment -- were late one month. Then the next month they informed us he had lost his job and they were breaking the lease to move in with family. We agreed to release them from the lease in exchange for 1 month's rent.
In November 2017 we then began renovations on the 3/2 side of the duplex. This side needed far more. We replaced the linoleum throughout with tile, except in the bedrooms where we used looselay vinyl plank. As with the 2/2 side, I did most of the electrical work myself, replacing fixtures, fans, etc. I can't tell you what a difference replaced the electrical sockets makes. Not only is it easy (if a bit tedious) but the new white sockets look amazing and have safety shutters which make them childproof. $150 at Lowe's did all the sockets and covers.
In January 2018, with renovations nearly complete on the 3/2 side, our new tenants on the 2/2 informed us they were breaking their lease to move to Mexico to treat a family member's very aggressive cancer. We suddenly were staring at an about-to-be vacant duplex. I made them the same deal, 1 months rent for release. I should mention at this point that I had screened the tenants and they had excellent credit scores and rental history with no criminal record. Things just happen, I guess.
After they moved out, it became apparent that their dogs had trashed the yard, literally destroying every scrap of grass and flower. We replaced some of it and put in a new cedar fence for $1600 to replace the one falling down. We finished the renovations of the 3/2 side for just about $18,000 all-in.
In February 2018, we put both sides of the duplex on the market at $950 and $1050 and got hit with over 50 inquiries in 8 hours. My wife and I decided to raise requested rent on both sides of the duplex to $1025 and $1125 per month (plus $25 pet rent, based on experience with pets so far) and still generated plenty of interest. We wound up leasing the 2/2 for $1050 and the 3/2 for $1150.
And that's where we stand today! YTD 2018 we've collected about $15,000 in rent with total yearly rent for the property at $26,400. We've had some maintenance concerns, but overall things have gone well, this year! Whew!
We just purchased another investment property and we're looking forward to (hopefully) smoother sailing from here on! Questions? Comments? Hateful diatribes?