Quest for early retirement

Quest for early retirement

Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes

Well, after seeing all of Sammy B’s post, i thought I’d start my own to keep track of how I’m doing. My goal is to retire by 50. I’ll be turning 36 soon. If I can average at least $300 a month per door, then I figure I need 3 doors a year. I’m assuming I can figure out how to pay for health insurance on that, but that’s another topic.

My first house was a duplex in Galveston. Currently renting to tenants that came with it at 2173 total per month, about 1700 a month in expenses. Somehow, the bottom tenants are using $600 a month in electricity cooling an 880 sqft home (bottom floor). I detailed some of it in another post. Fortunately, I have a happy update on that property - Galveston housing Authority agreed to have utilities switched to tenants AND they suggested increasing rent to 1400 for the downstairs. So I’ll be getting g 2250 total and dropping a 700 a month th expense (water too).

I’ve been looking for the next property, and probably made about 7-10 offers. I even went and bid at the Harris county tax auction. Well, this past weekend my realtor called and said someone be knows at a bank is going to list a bank owned 996 sqft 1/1 in Galveston and we can have first look at it, and they’d probably accept 85-90k. It also had 4800 taxes we’d have to pay.

We went to look at it Tuesday night, and at that price, I was expecting some serious work needed. Turns out it was an Airbnb rental that was already staged for the next guest and in very good shape. It even recently had central ac installed! Power still on.

It was 2-1 long ago, and were going to add a wall with a door to put that room back. We're using Jet Lending for 3 months, and we expect the ARV to be 140k after about 9k worth of work - paint the porch, pressure wash siding, new laminate in bathroom in addition to wall.

Under contract as of today, hoping to close Friday, that will probably slip to the following Tuesday or Wednesday realistically though. They accepted our first offer of 85, and that makes me wish we’d started at 79, oh well.

Should rent 1200-1350, however, being that it is already furnished except for the extra bedroom we’re adding, we’re going to give short term rental a try. Airbnb estimates we should earn 2250 a month with a 50% occupancy rate. We’ll try it through the peak summer time, and if that doesn’t work, we’ll rent it long term (or sell it). I like this one because it seems to have a low margin for catastrophic screw ups

Anyway, sorry for the long car, and thanks for reading

Edit: none of the formatting in the app took. 

Home 2, door 3 of 45, i clearly need to hire a professional for pictures when i list it

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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y

Looks like a nice unit. When considering vacation rentals, don't forget to add in all the additional expenses. Let's assume you are correct and can make $2,250 a month.

I think Galveston charges 9% tax and AirBnB will charge 4% so that's $292.50 in fees.

You have utilities, TV, and internet. I expect those will average $300 or more. You'll have to maintain the lawn which can cost another $200 a month but let's assume there's only six months of lawn care so you can average that out to $100 a month.

Just those charges alone ate up $700 a month so your income just dropped to $1,500. That's $150 - $300 more than you would get with a long-term rental but...you haven't counted the cost of your time. You have to answer inquiries, process reservations, get guests checked in/out, handle maintenance calls, inspect and clean after every stay, replace consumables, etc.

Again, I don't know the actual numbers but it doesn't take much to bring that income down to the same level you would get with a long-term rental and the long-term rental requires a lot less work on your part. Something to think about.

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  • Rental Property Investor · Galveston, TX · Member since 2018 · 49 posts · 29 votes
    7y

    @Bruce C. we looked at that house, but didn’t feel up to the task. You’ve done a fantastic job on that

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    7y

    Hey @J Chad Davis what did you estimate on the rehab? And what purchase price were you thinking?  They had it listed at or over 200k from end of last year until fairly recently. My understanding is that the lady who owned it (for a long time) passed away and she left it to her church. They never looked at it and probably thought they could get that from someone wanting to live in it and do the work at the same time. 

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    7y

    Well we had scheduled to close tomorrow (Thursday) evening, but due to all the rain and tropical depression, no carriers are binding flood insurance. We’ll have to wait for markets to reopen, so close is probably pushed to Monday. 

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    I hope your properties and your primary are safe during the storm @Bruce C.

    So far, so good for mine but it's been close.  We'll see what happens.

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    7y

    Same to you @Sam B.

    Only the issue at the one house fortunatley. It was a weird storm. Wasn’t even close to Harvey. I’d say area wide, I’ve been through quite a few that were a lot worse (and not all were tropical).  Most of the area only had 8-12” over a 48 hour span. BUT, there were some pockets that got it worse than Harvey. I think the biggest issue is the water flow and drainage. We need to drop the money to get the drainage right. I’ve been here 30+ years. 4-8” rains happen a lot, and we’ve started flooding every time that’s happens because we’ve paved everything over without putting in proper drainage. 

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    6y

    I got busy and never updated. We closed 9/28. 

    Insurance numbers ended up being terrible. I’m going to install some openings on ground level, but right now I’m looking at 6600 a year through Wright. 

    5 ton AC install mostly finished up. They are doing a system check today. That’s going to end up at 11k, had 12.5k budgeted.

    Been running through contractors and GCs for quotes. Had a GC quote me $68k...geez.  I don’t think he wanted the work.

    I’ve found a couple contractors I’m going to use. First set will put up new drywall on ceilings and get the walls textured in the half of the house that had wallpaper. That’s gong to run me about 3700.  

    Other set will install and plumb new bathroom, covered deck, and new electric water heater. That’s going to run me about $14k. 

    To save some money, I’m going to paint and install the kitchen lowers myself before having someone come in to do the countertops. My ceiling and wall prep number was underestimated going in to this, so this is where I’m making that back up. That’ll keep me close to original budget without using contingency.

    If there are no major surprises, I should end up at $30k for repairs, with 5k left for “planned” contingency, and another 10k for unplanned. 


    I’ll put up some pictures of the progress Sunday. 

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    6y

    All that work and all I have to show is one room painted - and it’s just the walls. Still have to get to the ceiling and trim. I started the flood openings last night and will finish them up tonight. Also cut up and removed the old carpet on one room. It’s still ugly, so no pictures yet. 

    The Ac worked great while we were there. Contractors are there texturing walls and putting up new ceiling Sheetrock. The contractors doing the bathroom and deck may be able to start this Thursday.

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    6y

    Don't know if this is the best place to ask for paint color advice, but i'll start here.  I wanted to try painting the dining room with some orange in it.  I don't know if I should do just 1 accent wall, two tone (maybe white on the bottom?), stripes, or some other combination.  

    Below is the LVT we're going to use.  It is the aegean travertine allure ultra from HD.  I'm not sure Orange even goes with it.  Speak up if you have any suggestions.

    First picture is of the dining room as is.  The louvres on the left side will be turned in to a door with window leading to a covered deck outside.  Ceiling tiles are being covered by sheetrock and will be textured.  


    floor.  Sorry for the large image

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    6y

    Been busy painting and destroying stuff. Here’s my late update

    Dupex: imalda repairs finally done and total right around 2200. Also have a few housing authority inspection items

    Vayk1 - a week ago was our first unbooked weekend since...April?  Didn’t like that. We did however do some horse trading with one of the sets of contractors for the house we are rehabbing. They were displaced by imalda and need a place to stay. We let them stay a week, they cleaned so cleaning ladies wouldn’t need to, and they knocked $500 off their bid. Considering we won’t have to pay AirBnB fees and taxes, we both came out ahead. 

    Vayk2 - lots of work going on. Contractors we bartered with cover tile ceiling with 1/4” Sheetrock and textured walls. I’ll say I haven’t been happy with their timeline, and some of their work had been subpar. Probably won’t be using them again.

    Also got updated flood quotes back at $6k a year!!!!  After quite a bit of back and forth I decided to “install” flood vents in the shop on the bottom  floor, and by install I mean I cut some holes. Got insurance knocked down to $500!  Went from mild panic attack at $6 spending 4.5 more a year than expected to mild surprise. 

    Deck is almost finished. New kitchen cabinets on order ($3800 from HD for cabinets and granite installed). We demo’d the old cabinets ourselves to knock a few hundred move off to try to get back closer to budget. Having some over runs due to rotted floor beneath old kitchen, electrical fixes here and there, and window repairs. My budget was 35k (the number I really thought I was going to spend) and I’m probably going to come in at 39. My contingency was 42. 

    Lost a window unit..

    Begging kitchen. That solid iron sink was heavy af


    mid demo

    Ready for new lowers

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    6y

    Dude, more info on...

    *Flood vents and how you went from a $6k quote to $500.

    ** $3800 HD kitchen w/granite INSTALLED?

    @Bruce C.

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    6y

    @Sam B.

    It was listed as being on a slab (diagram 1, lower ins rates), and I didn't second guess that designation based on what I saw - neither did my inspector or RE agent.  When I got the flood cert back, the house was considered to fall under diagram #6 (crawl space, wtf?).  I should have gotten the flood cert before purchasing.  Lesson learned.  I actually might have been scared off if i'd gotten a $6k/year quote and not known how low i could get it.  

    Since the bottom is enclosed, apparently there is a HUGE rate increase if there is not some type of flood venting.  They are concerned that if the house is surrounded by water that the pressure won't be able to equalize and will collapse the house.  Interesting fact - there is a mark about 8' up on the walls, just below the living space floor that says "Ike - 2008".  The house was built extremely solid in the 40s, but I get their concerns.  

    Minimum requirements are 1 sq inch of opening per sq foot of house above enclosed opening (living space), and the openings must be on opposite walls.  I've got ~2100 feet on top, so I cut a 10' long section 10" high on each side and covered them with wire mesh to keep animals out.  They wouldn't give me an estimate based on my proposed openings, so I didn't want to spend the money on 'engineered' vents and only get back $400.  I'm an engineer anyway, so these are engineered vents, right? :)

    I'm paying $1800 a year on the 2nd house we bought that is a little under half the size and is also diagram 6, so I will likely be doing the same thing over there after we finish this house.  

    Kitchen - the kitchen is not that large, and we are only replacing the lowers.  HD has some granite that is ~40/sqft installed if you get at least 25 sqft, and we have about 35 sqft.  We didn't go expensive on the cabinets - just the standard premade shakers - and we only have about 4 to install.  We've still got 100-200 on a sink and probably another 400ish on a dishwasher (that I will likely install myself), and we saved about 600 doing the demo ourselves.  If it wasn't for timing, i'd probably install the lowers too, but there are only so many weekends left.  

    How's everything going your way?  Still in debt pay down mode?

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    6y


    Been a while since an update. I’ve spent most weekends and quite a number of evenings after work trying to get house 3 going. Here is my end of year summary for 2019. 

    Not much new to report on the duplex. After the animal hoarder eviction costs, no occupancy while fixing the upstairs unit, and costs of repairs, we ended the year -$660 cash flow. I consider that to be pretty good. We'll probably turn over the downstairs tenants this year, but as long as it doesn’t involve rabbits, pitbulls, and a roach infestation, we should start turning a good profit this year.

    At the first AirBnB we’ve been fighting bed bugs. We’ve treated it a few times now and I think we’ve got it, but it hasn’t been fun losing the income. Just glad this didn’t happen during spring break or summer. Otherwise, before that happened, December Was going well enough. We’ll see how things go in year 2. I think it will be better than year 1 as we were slow to get bookings in the peak season last year before we had any reviews.



    We’re close on AirBnB 2. Down to all the small stuff that seems to add up to a LOT.  Master bathroom just needs shower door and entry door installed. Lots of quarter round to put down around new floor. A few windows to paint, and the old wood floor needs to be cleaned and RE-urathaned. 

    We have run in to a few new problems that have eaten in to contingency:

    1) perfectly good gas line underground was off more than 12 months. Requires reinspection. No one would inspect as is, said a new line had to be installed. First quote was $6200 for 35’ of underground line. Wtf?  Ended up getting it done for $2200

    2) city inspector flagged us for installing the water heater w/o a permit. ~200 to pull permit

    3) ~$1k more in unexpected electrical

    A few new pictures. We have a draw inspection tomorrow.  Need to pay off some of my debt from repairs to get my credit score out of the hole.  I’ve started the ReFi paperwork and hope we can get ReFid by end of January. 

  • Kerry BairdPro Member
    Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
    6y

    Looking good! 
    What have you done for bedbugs? My thoughts are diatomaceous earth, ozone machine and full tent as for termite treatment. I'm wondering what you have done. I have covers for my mattress and pillows in my STR. Have you had those?
    I love seeing your kids chipping in to help! Mine did too from little ones, and are pretty good around houses as teenagers. 

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    6y

    @Kerry Baird

    I got a quote for tenting at ~2500. I got another quote for spraying (I forget the chemical) for ~350, and it is a local company my house cleaning company recommended. Being that it is Jan and off peak, it was worth it to try the spraying. If it was mid June I would have paid for tenting. I will add that the company will keep coming and spraying until you don’t see any more bugs. 

    I did have the mattress covers, and they still got on one of the beds. They were the worst though on the sofa bed. From what I’ve read, ozone machine isn’t going to help, and the DE is only really useful as a preventative. You’ve pretty much got to chemically nuke the house one way or another. We’ve had 4 sprays total, and I think we’re good based on what I saw last night  

    My daughter is old enough at 7 to be very useful, and she usually wants to help for a little while. I try to make it fun for them and throw in things like getting to use the nail gun or saw (while I’m holding it).  I also rarely make it mandatory and pay them a quarter or a dollar or two depending on how much they do. By the time their 10-12, if I can make this my full time job, they may have a good summer job to earn some cash. 

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    6y

    Great update @Bruce C. glad to see AirBnb #2 coming along.  And I hear ya on the credit score and getting that out of the hole after taking on the short term debt, what a pain but always good in the long run.

    Hope you've been well - I've taken a break from BP/real estate, bought some fun toys this Winter and am looking forward to Spring (up in the Pittsburgh area now).  I'm still back in the Houston area every few months, will need to hit you up on the next trip and grab a coffee/beer in Galv.  

    Keep it up and GL!

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    6y

    @Bruce C.  Checking in with you, how are you doing?

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    6y

    @Sam B.

    Well, not the end of the world, but not great. Our AirBnB that we started last year was on track to book for almost 50% more per night in March with a an occupancy rate close to last years around 90%. The AirBnB we just finished rehabbing got some bookings at rates higher than expected this early on, and we were even getting bookings in June already.  

    When things started shutting down the 12th bookings started canceling, and by about the 16th we had only 2 bookings left. We’ve had no inquiries. 

    If we get back to normal, I think the new property is going to do well. The first property is smaller and is one of hundreds on the search. Sleeping 18+ at the new property makes us 1 out of 40-50.

    We may convert the smaller house to a long term rental if things don’t loosen up by mid April.  

    How are things going on your end?

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    6y

    @Bruce C.  Good to hear from you.

    Sorry to hear on the Airbnb but its understandable.  Things will turn back around soon enough.  Congrats on getting the occupancy up to where it was before all this **** hit the fan.

    Things are OK so far.  As you mentioned, I think I'll see more of an impact later this month/by May.  Reserves are OK right now, so I'm embracing things now and looking forward to things getting back to normal, as I'm sure we all are.

    Hang in there, holler/PM me if I can do anything.

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    5y

    How are you hanging @Bruce C. ?

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    5y

    Hey @Sam B. 

    As in sure it has been for everyone, it's been kind of crazy. On the housing front, we've been looking but the prices are kind of crazy right now. To the point I'm almost tempted to sell the 3 properties we have (but I'm not, long game). The long term duplex fortunately the lower unit is HUD and auto paid, and the upstairs they been paying on time. The vacation rental was great until August but slowed down more than normal for the end of August through early September. So we found a couple of traveling nurses for a long term stay at the 2brdm until mid January. Tried the same for the 4bdrm, but not many people looking for that price/size combo.

    I’ve been heading to the Galveston county auction, but there’s hardly anything for sell, and there are more people at the outside auctions than there were pre-pandemic. 

    At my job, I can’t complain because I haven’t been laid off and I haven’t been asked to cut staff. We have had to cancel all capex and overtime though. We are still very busy, but it is mostly working off of backlog and sales cutting prices. Our output is probably going to be up 10% this year, but our CM will probably be 25% of what was expected. With all the refineries pushing turnarounds back or just flat out shutting down, I’m worried about end of December through early March. If we can just limp through until then, I think the flood gates will open. 

    Kids (5 and 8) are doing OK, but they are ready to see other kids.  We’ve home schooled them through all this  

    How’s it going for you?  Didn’t you get ~8-10 new rehabs going by the end of last year?  How have they held up through all this?

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    5y

    Between Siri and BP’s autocorrects, that last post is terrible grammatically, but I’m not going to even try to correct it. 

    Didn’t realize how long it has been since I posted. Hit a weird mental state by the end of May and then got really busy in the summer.

    On the new larger AirBnB, June-mid Aug ended up being great, better than expected for year one in the middle of a pandemic when bars were still **** down and I think most of the other stuff was 50% occupancy. Gives me hope for when things get back to normal. 

  • Member since 2020 · 2 posts · 0 votes
    5y

    This thread is great! Been looking to purchase my first house on Galveston so the repair, insurance, and vacancy numbers provided are very helpful.

    Thanks and look forward to your next post.

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    5y

    Signing in for my update. Unfortunately not a lot of movement. I’ve put it n a few offers here and there, but not closed on anything.  Been to most of the Galveston county auctions and bid on a few things, but not won. 

    We did get under contract for a house in Baytown. Was listed as a SF, but it is zoned MF. 3/2 1400 sqft main house, 2/1 600 ft apt over the detached garage that had a 3 year tenant at $650/month. Viewed the house, and it was old and needed some updating, but could be made to a nice rental for that area for $20k and some sweat. We went back and forth with the seller agent on price and seller financing, agreed to something, and then found out he hadn’t actually talked to the seller. So we started over and ended up with what I thought was a good price and short term financing via Zeus. Went under contract and went to do inspection as well as get our first look at the apartment which it had been implied it was in serviceable shape. Well, it was not.  No one should have been living there. Electrical was the worst of it (burn marks in the panel where it had been and still was arcing, bad splicing using cheap extension cords to power fans).  On top of that the sub floor was rotted due to poor toilet installation, plumbing was pvc duct taped to cast iron that was falling apart, floors and walls needed to be replaced, rotting framing on the garage ground level due to siding issues, and a crack running all the way across the garage floor that was 4” wide at some points.   No go. I wanted something to do with the extra work from home time, but not that much.  The apartment wasn’t safe to live in, and I’m not sure we’d even be able evict the tenant to repair if they didn’t go willingly. We told them we were canceling if they didn’t drop the price $35k. They canceled, and the house has gone off and on contract a few times since. 

    The 2 "STR" houses are doing OK with moderate term renters. The nurses just left the smaller 2 bdrm so we are back to traditional weekend stuff. I did spend a weekend painting and getting it ready for what I hope are good spring break numbers. I also had time to install flood vents in the storage area and scheduled an elevation. Based on the other house, I think my flood insurance should drop from $2800 to about $500.

    Definitely feel like I’m behind on my goals at this point and it has depressed me a bit. But as far as problems go, relatively minor compared to everything else going on. 

    Prices are just a little too ridiculous right now. I’ll keep heading to the auctions, but with the eviction stays there are just handful of houses and a **** ton of bidders. I’ve also started digging in to struck off properties that have been sitting for a while. Those are mostly vacant land, but maybe I can get a hold of something to sell and raise more capital, or at leas keep my busy. 

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    5y

    Small update to what feels like my failing quest.

    Made more offers and have bid on some properties at the courthouse, but no new property yet. I can't figure out if what people are asking and/or estimating for ARV will hold or not. For instance, house in Galveston on the market for about 3 weeks. Only 800 sqft, small 2700 sqft lot, no garage, no driveway, not elevated with a storage area underneath, and essentially off Broadway, 1 mile from beach.

    It is pretty much a gut and redo, and the guy wants $125k for it, and I'm not sure he's far off from what he'll get. He turned down our 90k offer. Just 2 years ago I paid 85k for a 1000 sqft home with a small driveway, underneath storage, 4100 sqft lot, already had central hvac, and just need about $10-15k to be nice, and it is just 6 blocks away, same distance from beach. My realtor thinks $225 is a reasonable ARV if it is done nice, but I just don't feel comfortable that is possible. I'm pretty much afraid to jump in to anything right now because I don't know if I need to recalibrate my expectations in price or if the bottom is going to drop out.

    Have made a tiny bit of progress on the cash flow side. I installed those flood vents at the smaller Airbnb and saved 2300 a year on flood insurance. Also finally got the flat roof at the duplex replaced ($3600, including inspection) so it can pass engineering inspection, and it has and the WPI8 has been submitted, and as soon as it is on file I’m going to save 4000 a year there. 

    After / Before (lol at the shingles for flashing)

    These vents were $100 each and can be installed if you passed cutting and gluing in kindergarten. Needed 4 for my 1000 sqft unit. Looking at the picture now, I really need to wash my siding... 😆

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    5y

    @Timothy Church

    Have you seen the listing for 3727 Winnie st down there?  It is clearly a lot of work, but it looks like it could work out. You have any thoughts on it?

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