In this video, I am showing you a video of a rental property of mine which is a 3 bedroom 1 bathroom house that I purchased for just $28,000 around 5 years ago. I purchased this house with no money down, and I used a private lender to fund both the purchase and the closing costs so it’s a true no money down deal.
This house was originally a rental property, and it came with a tenant in place. I buy a lot of properties like this from disgruntled landlords who want to sell or are tired of being a landlord. This happens a lot in lower-income neighborhoods, where the maintenance and repairs (and the neighborhood) can scare many newbie landlords away.
These same landlords are often reluctant to “disturb” the tenant and often have below-market rents which is why they struggle to cash flow. They are “afraid” to raise rents because they don’t want their tenants to leave.
Not being able to show the property easily, and the below-market rents eliminate a lot of my competition as they get frustrated trying to get an appointment to see the property. In scenarios like this immediately sign a purchase contract, and then make sure that my inspection period allows me to get an inspector or one of my crew inside the property. This is a good way to buy properties like this at a discount. Sign the contract first, worry about the inspection later. Many “investors” that buy from wholesalers do the opposite. They try to make an appointment first before committing.
After the most recent tenant moved out, the house was in very bad shape. I decided to do a complete renovation of the property since there was a lot of deferred maintenance and repairs that were needed. I also decided to install a Central Air system.
Now that the renovation is complete, I have to decide what to do with this house. I have two options. The first option is I can list this property for $160,000 and sell it very easily since there are so many first-time homebuyers looking for a home and inventory is so low. This should net me around $100,000 profit after paying off the lenders and the repairs.
The second option is I can rent the house out for a higher rent and put another tenant in place. Being that this is not the best neighborhood and that prices have increased so dramatically I am leaning more towards listing the property. This is always a difficult decision to make. But I am certain that I could find another property in this same neighborhood for around $60,000, repair that property and sell it for the same $160,000. At the end of the day, the decision really boils down to whether or not you think prices are going to keep increasing or not.
In this video, I speak about uniformity. For example, in this house, we are using the grey, white, silver color theme which means we want everything to be either grey, white, or silver. My contractor on this job did a bad job picking the flooring since our usual grey Life proof laminate was not available. He went with laminate flooring that is browner than I would like. He also used a different backsplash that I did not like either. You should always specify exactly which materials you want your contractors to use because if you don’t, they will use cheaper materials.