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Property #2

February 26, 2011

I found this property by driving a neighborhood that I was very familiar with.  This was a Freddie Mac foreclosure.  I contacted the agent the week before she officially had the listing.  She made me wait to put the offer in, but I made her aware that I was bidding on it.  Their list price was actually competitive and I ended up bidding slightly over list.  I effectively had the property under contract by the time she put it out on the MLS.

This home needed minimal work to get it rented out which is something I look for in a property.  I painted a couple of rooms and just touched up three other rooms.   I spent a total of just over $1,500 to get it rent ready.  I closed on the property on Dec 7 and had a tenant in on January 8.  Without the holidays I could have turned it over even quicker.

The home is a 3 bedroom, one bath with a nice 2 car detached garage built in 1959.  It’s a pier and beam with great hardwood floors located in a nice working class neighborhood.  It sits on a corner lot which is great as my father owns a few other homes on the same street.  My plan was to put a sign in this yard for any of the other 3 homes on this street that also become vacant.  We will have to see how that works out.

Here are some of the numbers on this one:

Tax value:  $80,900   [after challenging the taxes: $60,500]

Purchase price:  $51,100

Square footage:  1,100 sq ft.

How I bought it:  cash

Rehab:  $1,500

Rent:  $750   $795

Rent ratio:  1.51%

  1. Cash purchase? Did you do cash-out refi?

  2. This was our first true purchase. It was a cash purchase with most savings and some from an unsecured line of credit.

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