New member down in west texas, looking to grow and learn!
X-ray technologist since 2015. CDL truck driver since Jan 2022. Bought my own first home (primary residence) in a small west texas town of 1200 population at end of June 2022. afterthought---I am thinking this was not a very great buy. Small town; does have a hospital where I worked, (but moved to do travel work to make more income). My mortgage is 1100 per month and I am thinking of ways to get this property to work to make me money. Residents of the town and neighbors say 800 per month would be average rent for a 3/1 brick home in this town. I am now wondering if I should build an ADU on the property for myself, as the home would better rent to a family than a single person renting out a room. Also, should I invest in adding a master bath for when it sells later down the road? ---Stuck in west texas.
#2 Mortgage Brokers & Lenders Contributor
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#2 Mortgage Brokers & Lenders Contributor
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Hey Anna! I think adding both the ADU and the master bathroom are good ideas.
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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Rent by the room. Contractors and truck drivers like yourself need places to crash, will be a lot of wear & tear on your property but you'll break even
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#2 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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Welcome to BP Anna! Great idea to do that also we are not too far away in Austin and would love to connect
Hi Anna,
Adding the ADU on the property as well as adding a master sounds like a great idea.
We are based in Austin, TX, and would love to connect.
@Anna Gaucin Depends upon where in West Texas. You mention Amarillo but Amarillo is in the north panhandle and is a great market to be in too. If in West Texas, it depends on where. If you are close to McDonalds Observatory, or Marfa or Fort Stockton then there could be demand there. Personally, I like Marfa and would rather stay in a nice airbnb than a tent or an old motel. I know that during the hunting season occupancy increases substantially.
It's confusing when you look at a map to understand what is considered north texas and west texas. But Amarillo, which is the High Plains region, is indeed called West Texas even though it looks more like north Texas on the map. And yes, Dallas is actually North Texas - the North Central Plains.
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#2 Real Estate Agent Contributor
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Before you get too far, I would suggest checking with the city if ADU is allowed. I don't see many of these in Amarillo....but not there very often and don't pay that close attention.
If it is, maybe you could really specialize...and as someone else said if you have truck parking....rent to truckers for the night....or if you are close to Route 66 rent to bike riders passing thru....or focus on any of the other specialties in your area....like including spray paint for the Cadillac Ranch, or balloons if they want to visit the Helium museum...or cool things like that. Maybe cater in the summer to people going to the Texas play or hikers in Palo Duro.
I've looked many times over the years at the cost for example of adding a Texas sized master bath and closet and for the cost vs rent or sales price increase it just didn't make sense in my DFW area in 99% of the cases...so kind of gave up on that idea. I would guess it is the same in Amarillo. If you think 2nd bath is important, probably cheaper to just sell the current one and buy a different house.
One think I notice is it seems many areas of town don't have HOA...so could you do something like buy an airstream and park in the drive and rent that out....or do other things like rent your garage?
Quote from @Anna Gaucin:
X-ray technologist since 2015. CDL truck driver since Jan 2022. Bought my own first home (primary residence) in a small west texas town of 1200 population at end of June 2022. afterthought---I am thinking this was not a very great buy. Small town; does have a hospital where I worked, (but moved to do travel work to make more income). My mortgage is 1100 per month and I am thinking of ways to get this property to work to make me money. Residents of the town and neighbors say 800 per month would be average rent for a 3/1 brick home in this town. I am now wondering if I should build an ADU on the property for myself, as the home would better rent to a family than a single person renting out a room. Also, should I invest in adding a master bath for when it sells later down the road? ---Stuck in west texas.
As is often the case, I appear to be the contrarian.
Your market appears to be a horrendous cash flow market. My market is a bad cash flow market, but I can find properties with rent greater than PITI. Note rent greater than PITI does not imply positive cash flow. Your property has rent far lower than PITI. This is extremely cash flow negative.
The cost to add an ADU is substantial. What would be the goal? To increase your negative cash flow? Your ADU rent is unlikely to result in positive cash flow if financed at a high loan to cost basis. It will increase your negative cash flow.
Note if you do not finance the ADU, It will cash flow but your IRR and ROI will be pathetic.
I see no scenario where either adding an ADU or adding a master bathroom is likely to be your best investment options.
Your property at that rent point has limited options. Have you looked into STR, MTR, or rent by room?
good luck