Updated over 8 years ago on . Most recent reply
Snowball, engaged! rental unit #6-lease signed & rent collected.
Good morning everyone! Last night my wife and I got our lease signed and rent collected for our newest rental, bought and rehabbed over the past 2 months or so. We are almost at our 3 year anniversary of becoming landlords, and we are really starting to gain some momentum. That snowball thing that you have read/heard about...it is real :). This is our 3rd property, 6th unit. It is a 1000-ish SF house in Bethalto, Illinois(25 minutes from St. Louis, MO) and we are really proud of how it turned out. With our current savings + current cash flow, we are hoping to start pulling off 2 of these properties per year for the next year or two. We are not using our equity, we are letting that build up for a big purchase down the road.
Here are the numbers:
Purchase price: 55,000.00($3,500.00 in sellers assistance for new AC/HVAC)
Mortgage = $44,000.00, 20 year, 5.0%
Repairs = $12,950.00(new AC/HVAC, new laminate flooring, fresh paint, new kitchen cabinets and sink.
ARV = $80,000.00-$85,000.00(per our realtor--i agree as well--i work as an analyst for an Appraisal Management Company)
Equity total = $36,000.00-41,000.00. Equity that we could cash our refi with: $28,800.00-33,800.00)
$950 in rental income
-$662.33 in total expenses(6% for cap ex, vacancy, and repairs, + PITIA)
=$287.67 in cash flow per month
We love the current cash flow, but the exciting part is the equity. We are not using any equity on our properties, and are letting that build up. We plan on using it all at once on a big purchase(or a couple of medium sized purchases) in a few years. After a few more deals like this one, we will be ready to make a big move, and at least 1 of us(probably my wife) will be out of the rat race!
Keep on Keepin' on!
DJ Cummins
Most Popular Reply
@DJ Cummins Thank you for the tips! I've been listening to the podcasts in my car during my commute and have definitely been learning a lot. I'm also in the middle of Brandon's book on rental properties which is very informative. I'll send you a colleague request because I'm sure I'll have a couple questions for you!