Munroe Falls, Oh Single Family Rehab to Rent - under contract!

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Munroe Falls, Oh Single Family Rehab to Rent - under contract!

Jen R.
Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes

So, a little bit of background...my husband and I have owned rental properties and have completed a couple of flips in the past, but we had a big move a few years ago (and had a couple of kids), and are just now getting back into real estate investing. This is the first property we have purchased with the intention of rehabbing and renting out. We've been looking at properties and placing (rejected) offers all summer, and are finally in contract! I've enjoyed reading other investor's deal diaries, so I thought I'd document our progress on this house, and would love to get advice from more seasoned investors along the way.

Here are the details:

Location: Munroe Falls, Oh (suburb of Akron); nice neighborhood with mix of owner occupants and renters (I'm guessing it would be considered a B-class neighborhood)

Type: 1500 square foot single family home, 4 bed/2 bath, 2 car detached garage

Purchase Price: $77k; seller paying $1.5k closing costs

ARV: $140k, after approx. $25k in repairs. Plan to rent the house for between $1200-$1300/month.

Rehab Needed: The house is in fairly good condition overall (solid foundation; new high efficiency furnace; newer water heater; updated electric), but we are estimating $25k in repairs. Biggest expenses will be roof repair, flooring, exterior and interior paint, some replacement windows, and cleaning/sealing the interior due to nicotine stains/odor. We'll also be doing updates to the kitchen and baths, but are hoping to keep as much in place as possible. We will also be doing some of the work ourselves since this is our only property at the moment, and we want to keep costs down. 

We are set to close on November 9, and are excited but anxious to get going; will post pics and updates as we go!

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  • Linval T.
    Investor · Bay Shore, NY · Member since 2014 · 1k+ posts · 688 votes
    11y

    @Jen R. - Congrats on your pending purchase. It sounds like a good deal and fit with a healthy ARV projection to boot.

    Coupled with that you and your husband have the skills and capabilities based on past experience, to add the personal touch and simultaneously keeping expenses low.

    Good luck with the project and we look forward to seeing those before and after pics.

    0Reply
  • Mike Walker
    Realtor · Fairlawn, OH · Member since 2014 · 35 posts · 8 votes
    11y

    Good luck with your purchase and rehab! 

    0Reply
  • Joe Trinsey
    Anaheim, CA · Member since 2014 · 20 posts · 1 vote
    11y

    Congrats on purchase and good luck with the rehab.

    0Reply
  • Lucas Kendrick
    Investor · MontgomeryCounty, MD · Member since 2015 · 17 posts · 5 votes
    11y

    Solid numbers with a bit of a track record behind you, looks like you got a winner here! Keep us posted!

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    11y

    Thank you all for the encouragement! I will post "before" pics as soon as we close!

    0Reply
  • Ryan Arth
    Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
    11y

    @Jen R. Congratulations. That was an area that I looked at when I first moved South. The pricing and schools seemed to make sense to someone not from the area, and referrals from other investors indicated that it was in line with what I was looking for at the time.

    I look forward to seeing what you accomplish with it.

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    So, we closed on the house on Monday and got started on demo this week...unfortunately we’ve also experienced our first delays in the project due to our demo “crew” (myself, my husband, and a friend), battling illness this week. As I am currently the only functional member of the team, demo has been slower than expected. Despite the setbacks, we’ve removed all carpet and baseboards from the upstairs, and gutted the upstairs bath. Today I spent 8 hours stripping wallpaper. And I’m not done. Ugh.

    Goals for the rest of the week include completing demo and washing all ceilings and walls to prepare to BIN the entire house, though the orange and yellow nicotine-coated drywall provides quite the seasonal glow. I will also get to exercise my scrubbing muscles cleaning the kitchen, which is currently coated with a layer of grease, presumably from the 3 deep fryers in the house. Apparently that’s so you can cook your chicken wings for the game, your turkey for Thanksgiving dinner, and doughnuts for dessert. All without cleaning a single item!

    Good news of the week: the quote for the roof work came in at $600 under our budgeted amount. Now to find someplace else to spend that cash...maybe on a deep fryer or three...

    Some before pics posted below.

    Don't have a great pic of the exterior yet; this one was creatively cropped by the seller to avoid the tarp covering a large portion of the roof..

    Room where the majority of the smoking was done, apparently:

    So that's the original carpet color...

    1Reply
  • Joshua Woolls
    Investor · Grosse Pointe Park, MI · Member since 2015 · 164 posts · 64 votes
    10y

    WTF... Where in Munroe Falls do they need bars on the doors?

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    @Joshua Woolls - that's actually just an "iron-look" screen door (which will be removed along with the shutters around it)!

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    Thought I’d post a progress update for the week. Demo should have been complete yesterday, but we hit a major setback with carpet pad removal. The carpet pads in the two downstairs bedrooms were old pads made of clay and rubber, which have literally melded into the subfloors. We spent an entire day attempting to scrape the pad off the subfloors, to only partial success. We have tried softening the clay with both mineral spirits and vinegar, but are still not able to remove the complete pad. We had planned on replacing the carpets with vinyl planks, but due to the conditions of the subfloors we may just give up and cover with new carpet and a thick pad. Anyone have experience with this? Anyone successfully removed these types of carpet pads?

    Otherwise, things are going well. Exterior paint crew has been taking advantage of the beautiful weather (not something that you can often say for Ohio in November!) and will be finished painting the siding by the end of the week. We also changed plans and decided to gut the kitchen. Once we emptied the cabinets, we realized they were in much worse shape than they appeared. Also found mold growth along the entire length of the sink wall. Despite the added cost, I’m secretly thankful for an excuse not to degrease, sand and refinish cabinets this week. Attached a few pics of the progress.

    One of the upstairs bedrooms ready for cleaning and BIN:

    Downstairs bedrooms are another story; we're still trying to remove the carpet pads:

    Kitchen is gutted but drywall needs to be removed from exterior wall:

    New paint on front elevation:

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    House still in progress; here are some numbers for anyone who is curious:

    Purchase Price: $77,400 (and seller contributing $1,500 to closing costs)

    Closing Costs: $1,530

    Loan information: 30 year fixed @ 4.875% w/ 20% down

    Estimated Repairs: $25,000 (we are still on target here)

    TOTAL PURCHASE COST: $42,010

    Taxes: $2,500

    Insurance: $730

    Debt Service: $328/mo

    Maintenance & CapEx: $2,100/yr

    Rental Income: $1,250/month

    Vacancy (assuming 5%): $750

    YEARLY EXPENSES: $10,016

    YEARLY INCOME: $15,000

    NET INCOME: $4,984

    CASH ON CASH RETURN: 11.86%

    In addition, we are projecting the ARV to be $140,000, so we should have plenty of equity to tap into in the future. Also, we are managing ourselves for the time being. If we were to hire a management company at 10% of monthly rent, that would drop our yearly net income to $3,484 and our cash on cash return to 8.3%. However, at that point we could also refinance and pull out a large portion of our initial cash investment.

    Will post updated progress pics soon!

    1Reply
  • Aaron Montague
    Rental Property Investor · Brookline, MA · Member since 2013 · 1k+ posts · 777 votes
    10y

    @Jen R.

    Looking good!

    Keep that 10% in your rental calculations.  Even if you don't pay someone else to manage it now, make sure you count on it in the future.

    Keep the updates flowing!

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    Thanks, @Aaron Montague! We will definitely keep that number in the calculations. We plan to manage ourselves until we pay off the mortgages at retirement, but obviously things could change over the next 30 years...

    At this point, the exterior is looking pretty good: painting is done, new doors are installed, concrete steps are repaired, roofers are starting next week, and windows are on order (2-3 weeks out on install).

    On the interior, we had a couple more surprises. We were hoping to salvage existing tubs, but once we cleaned them up we realized that the grime was hiding some cracks and chips in the fiberglass. So, plumber came last week and installed new tubs. Also, after we cleaned and sealed all the rooms with BIN, we could still catch whiffs of cat urine in one of the bedrooms. We ended up having to tear out and replace all the underlayment and subfloor around the perimeter of the room. We also ended up removing the underlayment from the other 2 bedrooms with the old clay carpet pads, as we were concerned about odor in there as well. In other news, our drywaller should finish tomorrow and we hope to start finish painting and tiling tub surrounds this weekend.

    New tubs installed and ready to tile:

    Returning the ceilings to white:

    Kitchen:

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    Progress report: Roof is done, windows are installed, tile work is complete, and interior painting is almost finished.

    We’ve had some cost overruns, mainly due to the bathtubs, kitchen cabinetry, and subfloors having to be replaced. Because of this, we decided to purchase used kitchen cabinets and appliances. I'm nervous that purchasing used appliances was the right decision, but the price was right, and we needed to make cuts somewhere to stay close to budget. Over the next week we’ll finish the kitchen cabinets and counters, replace the electrical fixtures, clean/paint the basement, and start laying flooring. Our initial goal was to be done in 60 days (which would be January 9th). But the extra projects above added to our timeframe as well, and we are now hoping to have the house rental ready in 2-3 weeks.

    Tub/shower surrounds:

    Kitchen in progress:

    A little more landscaping work and the exterior will be complete:

    0Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    10y

    Here you go @Jen R., back where it belongs. I had actually looked at this and knew it belonged in IDD, don't know how I mistakenly moved it. It's a great job you're doing, what a transformation! 

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    Thank you, @Karen Margrave!

    0Reply
  • Carrie Giordano
    Investor · Marina Del Rey, CA · Member since 2015 · 297 posts · 87 votes
    10y

    @Jen R. Good luck with the rest of the project! I have not heard of anyone using used cabinets but they look good from the pic! Where did you find them?

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    @Carrie Giordano, the cabinets were a Craigslist find, and they're in very good condition. Bought the whole kitchen with all appliances included (frig, range, d/w, micro, and extra built in oven that we will probably sell) for $1,000, plus $75 for the UHaul rental. Install was a little tricky: we had to tear apart one of the extra cabinets in order to create some filler pieces to make them fit the space. I would normally want to put in all new appliances, just to cut out maintenance headaches, but hopefully the initial cost savings will make it worth it.

    I've also found good deals on used cabinetry at our local Habitat ReStore, both kitchens and bath vanities. 

    Been following the deal diary you have going on up near Cleveland; hope you can get everything worked out quickly with the city!

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    Electric work is finished. As always, we had some wiring mysteries to solve along the way. Probably the strangest thing is that one of the light switches in the kitchen actually operates the built-in dishwasher...can’t figure out why that ever would have been a practical requirement. The basement took a little more work than expected. When we purchased the house, the basement was partially finished with a drop ceiling and wood paneling. During demo, we tore down the paneling and drop ceiling (which were in poor condition), but left the stud walls, thinking we may finish it again in the future. However, upon closer inspection, we noticed all the 2x4s had been installed incorrectly and were not stable, so we ended up having to tear all of them down. It now looks much better, and the block walls have a fresh coat of paint.

    Hoping to finish the flooring this week and set toilets and vanities in both bathrooms. I’m also hopeful that we can refinish the stair treads this week. They’re pretty beat up, but I hate the idea of re-installing carpet over them.

    Bedroom 1 just needs baseboards popped back up, then we can call our first room "done":

    Layout of the house for anyone who is interested:

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    After much debate, we decided to go with Allure vinyl planks throughout the entire house (except for tile at the entry and one bath). Install was easy and I’m anxious to see how well it will hold up over time. We got most of the flooring on sale at $0.99/square foot, so that helped a bit with the cost overruns on the bathrooms. Also had central air installed this week; we thought about putting this off until spring, but with the mild weather this winter, we feel we got a pretty good deal by installing it now ($2,400 for the C/A unit, install, and new thermostat, and $200 for the electric work).

    The only major project left is the kitchen perimeter countertop; we’re still debating over laminate vs. granite, but we already have some showings scheduled for next week so we have to make a decision quickly. We lucked out on the island countertop: found a 4’x 3’ slab of black pearl granite that cost us $200 for the slab and fabrication (we installed ourselves). Will post final pics as soon as we get everything cleaned up!

    0Reply
  • Ryan Arth
    Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
    10y

    @Jen R. It looks like it is coming along well. Soon enough to the finish line and an offer after that. With the mild weather thus far this year people are still out looking. I have one closing in two weeks, which I was pessimistic about given that it is January. 

    Best of luck on your project.

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    Thank you, @Ryan Arth! Yes, the weather has been a blessing for rehab projects, that's for sure!

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    House is officially listed for rent as of last Friday. The rehab took 75 days, about 2 weeks longer than we hoped. We decided to save money and try our hand at fabricating Corian countertops for the perimeter cabinets in the kitchen. The Corian came with the used cabinets we purchased, but since we substantially changed the layout, we had to cut the Corian and seam it back together to make it fit. It turned out pretty well, and allowed us to advertise granite & solid surface counters. So far we’ve had almost 20 inquiries and have 5 showings lined up for this week.

    Here are the final rehab numbers; the asterisked jobs are those that we DIY’d.

    Final Costs:

    Item Cost
    Demo/cleaning* $620
    Roof work $4,900
    Exterior painting $2,600
    Concrete repair $1,100
    New exterior doors & locks $1,100
    Windows $3,500
    Drywall $1,200
    New bathtubs & associated plumbing/trim kits $1,800
    Remodel remainder of two bathrooms (toilets, vanities, & tiling tub surrounds)* $1,150
    Interior painting (includes BIN primer on all walls, ceilings & subfloors)* $950
    Electric (interior & exterior fixtures; switches & outlets)* $500
    HVAC (bath exhaust fan w/ ducting to exterior; central air) $2,800
    Flooring (ceramic tile and vinyl plank; refinish stairs)* $2,200
    Used kitchen cabinets & appliances* $1,100
    Kitchen counters $325
    Carpentry (interior doors & knobs, baseboards, trim, etc.)* $550
    Sump pump* $175
    Landscaping (trimming, mulching, fill dirt)* $50
    Safety (CO & smoke detectors; fire extinguisher)* $70
    Utility costs during rehab $230
    Misc (plywood; insulation)* $250
    Tools/Rental equipment $550
    TOTAL $27,720

    *DIY jobs; the cost listed is for materials only

    I’m disappointed that we came in about $2,700 over budget, but the unexpected cost of replacing both bathtubs was mostly to blame. We also went over our budgeted amount on the windows, as we had to replace several more than expected. Because of this, we had to do some bargain shopping and put in some extra labor to keep costs from creeping any higher. On the other hand, hopefully by doing so much major work up front, our maintenance costs over these next few years will be lower than budgeted (fingers crossed!).

    Currently, we are all in at about $44,700, and are projecting a yearly COC return of 11%. In addition, we estimate our equity in the home to be about $78,000 ($140k ARV - $62k mortgage), so eventually we should be able to refinance and pull most, if not all, of our cash back out. I'll put together some before and after shots and get them posted soon.

    0Reply
  • Jerry Padilla
    Lender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
    10y

    @Jen R.

    Looks great and great plan! After 6 months of owning the property, you can pull out cash based on appraised value! Then repeat! O

    0Reply
  • Jen R.
    OP
    Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
    10y

    We’ve been busy showing the house and screening tenants this week. In less than a week we had over 30 inquiries about the property, and several qualified applicants, and are hoping to sign a year lease tomorrow for move in end of February for $1248/mo. Here are some before and after pics! 

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