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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  • Real Estate Agent · Galveston, TX · Member since 2015 · 255 posts · 219 votes
    5y

    @Bruce C.

    If you are planning for a longer hold, it could work out. There have been great strides made to make this area north of Broadway/West of downtown into a better space. Since it was a bit rough prior to Ike, it has seen a lot of improvement. The city and certain developers have put some serious money into this area. The main issue is it still has a long way to go. You might be able to do some basic things and hold them as lower-income long-term rentals for a long period and have it work out. Not one I'd advise putting in a lot of money to make a vacation rental though.

    I think things moving into these neighborhoods will begin to increase due to the sales value people are getting on their homes down here! I know I've shown several homes this year where people bought them just over a year ago and are relisting for $50-75k more having done no work. As people need a more reasonably priced home, they will expand into these areas of Galveston and begin to renovate. It is all about how long you want to hold.

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    5y
    Originally posted by @Timothy Church:

    @Bruce C.

    If you are planning for a longer hold, it could work out. There have been great strides made to make this area north of Broadway/West of downtown into a better space. Since it was a bit rough prior to Ike, it has seen a lot of improvement. The city and certain developers have put some serious money into this area. The main issue is it still has a long way to go. You might be able to do some basic things and hold them as lower-income long-term rentals for a long period and have it work out. Not one I'd advise putting in a lot of money to make a vacation rental though.

    I think things moving into these neighborhoods will begin to increase due to the sales value people are getting on their homes down here! I know I've shown several homes this year where people bought them just over a year ago and are relisting for $50-75k more having done no work. As people need a more reasonably priced home, they will expand into these areas of Galveston and begin to renovate. It is all about how long you want to hold.

     Yeah, definitely not thinking about turning it in to an vacation rental. I need to get in and look at the house to see how much needs to be done.  It’s currently rented at JUST $300 per unit. Crazy low. Even if non of them can be made in to 2 bdrms (seller isn’t providing a lot of info) you should be able to get at least 500 and probably closer to 650. 

    My thought is roll one tenant out at a time.  You’re not going to add quartz countertops and whatnot, but you can make them nice, presentable, functional units, and if I’m doing most of the labor I can keep the costs reasonable. Even at only $300/unit/month, the other 7 units would mostly pay the mortgage.

    And yeah, you only so much room to go in Galveston. You’d think N of Broadway would turn around at some point. 

    That’s just what’s rolling through my head. Trying to work with that seller and see if we can make something happen.  Feel like I just need something to work on 

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

    @Bruce C. Glad to see you're still kicking Bruce.  Hoping Spring break works out well for you.

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

    Thanks Sam. Spring break turned out pretty good on the vacation rentals. How are things going with you?

    I had a set back with the wind insurance. Last year they only wanted us to redo the flat roof. We had insurance lined up and I had my old canceled, and I got a call from my agent saying now they want the whole roof redone and certified. To do the other part it will be ~3500, and it will only have been about $7k total, but it would have been nice when I asked if they had told me last year. 

    We have our 4th property, but it’s a a LONG time table. We purchased a 4th row lot on Bolivar from the tax sale auction today! Current plan is to build an elevated deck with a roof that is engineered/designed to one day be finished out as a 3 or 4 bedroom house. In the meantime, we’ll set up for 2 RV connections and spots, buy one RV to leave there, and rent out the RV and/or RV spot for people bringing their own. We’ll see how the the plan evolves. Our long term goal is to retire to the beach (15-20’years). We’d prefer Galveston, but this may be our spot depending on how things work out. 

    Our current inspiration for deck design a few blocks away:

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    4y

    How's things going @Bruce C. ?

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    4y
    Originally posted by @Sam B.:

    How's things going @Bruce C. ?

    Crazy.  How are things for you?  I think you ended up with about 10 properties a couple years back, how is the appreciation treating you?  

    I’m sitting on the couch recovering from knee surgery.  Doctor thought it was a meniscus tear, ended up being a  congenital placae (sp) issue.  I’ll be happy to be able to move around without pain again, but I started the year off with a partial pec tear and am ending it this way, so a little unhappy.

    We bought almost 2 acres in Brazoria (the town, yes, there is a town) with a triplex and two SFH on it. Triplex is three 2-1s with oversized 1 car garage. All need serious work. We also want to add 6-10 RV spots. Got it for only 70k, and there is a renter in one sfh paying the short term loan. We've only leveled the triplex so far. It needs a new roof next and a total redo inside. It's a long term project. It has put the plans for the Bolivar lot on hold. This property we're calling the FHouse. The kids think F is for fun, the picture below is the real reason though 😀


    We’ve been doing work on the larger AirBnB since just before thanksgiving. Figured with the kids in home school it’d be the only time we ever got to do something like this.  We were getting it prepared for an appraisal and refi. At a minimum, well knock off 300-400 a month between the lower interest rate and dropping pmi. If the appraisal comes back near the county number, we’ll take money out at a lowe rate than our short term flip loans. We’re also appraising the smaller Airbnb as we believe we can get some money out too with the way values have gone. 


  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    4y

    Great update @Bruce C.

    What do the final numbers look like once you get the $70k place complete, including the RV spots, as far as monthly cashflow/ARV? $70k is cheap!

    All good on my front, just finished refinancing a few properties and will likely sell a couple in the Spring. Yes, the last couple of years has been insane for appreciation.

    GL on the recovery!

  • Mike ReynoldsPro Member
    construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
    4y
    Originally posted by @Bruce C.:
    Originally posted by @Sam B.:

    How's things going @Bruce C. ?

    Crazy.  How are things for you?  I think you ended up with about 10 properties a couple years back, how is the appreciation treating you?  

    I’m sitting on the couch recovering from knee surgery.  Doctor thought it was a meniscus tear, ended up being a  congenital placae (sp) issue.  I’ll be happy to be able to move around without pain again, but I started the year off with a partial pec tear and am ending it this way, so a little unhappy.

    We bought almost 2 acres in Brazoria (the town, yes, there is a town) with a triplex and two SFH on it. Triplex is three 2-1s with oversized 1 car garage. All need serious work. We also want to add 6-10 RV spots. Got it for only 70k, and there is a renter in one sfh paying the short term loan. We've only leveled the triplex so far. It needs a new roof next and a total redo inside. It's a long term project. It has put the plans for the Bolivar lot on hold. This property we're calling the FHouse. The kids think F is for fun, the picture below is the real reason though 😀


    We’ve been doing work on the larger AirBnB since just before thanksgiving. Figured with the kids in home school it’d be the only time we ever got to do something like this.  We were getting it prepared for an appraisal and refi. At a minimum, well knock off 300-400 a month between the lower interest rate and dropping pmi. If the appraisal comes back near the county number, we’ll take money out at a lowe rate than our short term flip loans. We’re also appraising the smaller Airbnb as we believe we can get some money out too with the way values have gone. 


     The FH house looks like something I would take on. I am a builder though so not daunted by that one. I have seen waaaay worse. 

    I have bare land down that way but cant figure out what to do with it. Took a year to find a realtor to even give me a call back. I figured RV park on the bay but couldn't buy out the neighbor land so my thinking was it would be too small. Thought about AirBnB but was told by a few locals that the bay is cursed on STRs. The gulf side was the way to go. Galveston county is for locals only I guess. 

    Anyway, good to see you are doing good down that way. I ended up investing in Little Rock and that has been pretty great so far. I would like to hear more about what you have going down that way as it might align with some of my interests also. Keep us posted. 

  • Mike ReynoldsPro Member
    construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
    4y
    Originally posted by @Sam B.:

    Great update @Bruce C.

    What do the final numbers look like once you get the $70k place complete, including the RV spots, as far as monthly cashflow/ARV? $70k is cheap!

    All good on my front, just finished refinancing a few properties and will likely sell a couple in the Spring. Yes, the last couple of years has been insane for appreciation.

    GL on the recovery!

     Where are your properties at? 

  • Mike ReynoldsPro Member
    construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
    4y
    Originally posted by @Bruce C.:
    Originally posted by @Timothy Church:

    @Bruce C.

    If you are planning for a longer hold, it could work out. There have been great strides made to make this area north of Broadway/West of downtown into a better space. Since it was a bit rough prior to Ike, it has seen a lot of improvement. The city and certain developers have put some serious money into this area. The main issue is it still has a long way to go. You might be able to do some basic things and hold them as lower-income long-term rentals for a long period and have it work out. Not one I'd advise putting in a lot of money to make a vacation rental though.

    I think things moving into these neighborhoods will begin to increase due to the sales value people are getting on their homes down here! I know I've shown several homes this year where people bought them just over a year ago and are relisting for $50-75k more having done no work. As people need a more reasonably priced home, they will expand into these areas of Galveston and begin to renovate. It is all about how long you want to hold.

     Yeah, definitely not thinking about turning it in to an vacation rental. I need to get in and look at the house to see how much needs to be done.  It’s currently rented at JUST $300 per unit. Crazy low. Even if non of them can be made in to 2 bdrms (seller isn’t providing a lot of info) you should be able to get at least 500 and probably closer to 650. 

    My thought is roll one tenant out at a time.  You’re not going to add quartz countertops and whatnot, but you can make them nice, presentable, functional units, and if I’m doing most of the labor I can keep the costs reasonable. Even at only $300/unit/month, the other 7 units would mostly pay the mortgage.

    And yeah, you only so much room to go in Galveston. You’d think N of Broadway would turn around at some point. 

    That’s just what’s rolling through my head. Trying to work with that seller and see if we can make something happen.  Feel like I just need something to work on 

     My father used to rent fishing cabins on Bolivar way back before the internet. They were nothing special but stayed rented most all year. Back then they were 35-60 a night. Winter was for bird watchers and duck hunters and people who wanted the beach without the crowd. He did a lot of weekly rentals for the hospitals in Galveston. All they wanted was a place that had TV/ac/heat and a bed. Many were cancer patients who just wanted to lay down after treatments. I dont know the area you are talking about but seems like if I was a patient, I would not want to cross that ferry after treatments. 

    Just a thought. 

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    4y
    Originally posted by @Sam B.:

    Great update @Bruce C.

    What do the final numbers look like once you get the $70k place complete, including the RV spots, as far as monthly cashflow/ARV? $70k is cheap!

    All good on my front, just finished refinancing a few properties and will likely sell a couple in the Spring. Yes, the last couple of years has been insane for appreciation.

    GL on the recovery!

     I’m estimating the triplex plus SF rehab at 110k, putting me at $180k total. Should rent 2800-3200 after that. As long as the city cooperates, I think I can get the pads in for $8k a piece, possibly as low as $4 if I have the time and don’t need to contract it out. I expect them to rent 300-350/month. So I’m looking at 24-48k for 1800-2100 if I do 6 pads.  

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    4y

    @Bruce C. well done, those numbers look awesome!


    I was thinking of you yesterday, visited Galveston for the first time, cool little city but I was only there for a couple of hours on a spur of the moment trip.  Hope things are well!

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    4y
    Quote from @Sam B.:

    @Bruce C. well done, those numbers look awesome!


    I was thinking of you yesterday, visited Galveston for the first time, cool little city but I was only there for a couple of hours on a spur of the moment trip.  Hope things are well!


    Doing alright here. Looking to buy in Galveston now?

    Time for a quick update: 

    We’ve filled 2 roll offs of just trash from the triplex and small sf home. Still no power. My 3 position meter socket is supposed to be here next week. Have been having trouble finding some electrical stuff in a reasonable time. Spent $950 for this socket because the $500 units have 128 lead time. SMH. 

    So once we got the units cleaned out, we then trashed them again pulling down old sheet rock. Hope to get that mess cleaned up this week. I feel bad ripping it all out.  Someone installed $2-3k of drywall, but they did such a bad job (furring strips every 3-5 feet) plus the smell from random squatters it’s just not worth trying to save. 

    If weather works out, I’ve purchased all the supplies for the roof, and I’ve found a crew to install it Friday.  TDI inspector coming then too. Crossing my fingers we don’t hit any major snags. If there are no issues, we’ll spend about $8k replacing a 40 square roof (plus about 12 sheets of plywood). Had quotes for $14k, so a decent savings. 

    As expected, the roommates/residents at the end of the street continue to not pay while blaming it on each other. Eviction papers filed yesterday. Hopefully we can get them out without any damage. If so, I’ll take a break from the triplex and do the light cosmetic rehab to get that one rented.  

    Had some help from the kids :)

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    4y

    Another week, another roll off. I think we’ve gone through 4 30 yarders and 1 20 yard (roof). We have just a little bit to clean out of third unit

    Roof took longer than expected. Tdi called the day before we were ready to go and said they couldn’t do it because they though some rafters needed to be replaced. Found engineer, he also postponed day before. And those rafters we just had to scab on to. But we are finally done as of today. 

    Evicting tenants in 3-2 SF. They are…interesting. Sherif is scheduled to show up Monday since they didn’t get out on time. Sherif actually said he’s had to deal with them over the years and hopes they leave town. JP clerk said she knew one tenant because she worked at the jail for a few years when one of the tenants was there. They all lie to me and try to point the finger at the other roommates (or someone else). Can’t wait to get them out. 


    I’ll probably switch gears and get that house ready to rent as it needs much less work.

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