The laminate installer made an appearance today, bringing us much closer to our goal of a Feb. 1st move-in. One more week of push, push, push and hopefully, the Magnolia house will be ready to rent. Ad goes in the paper Monday.

Cabinets Before: Stained, glazed and polyurethaned but sadly, counter-deficit.

And after: Wilsonart laminate installed on counters and backsplash in a faux granite pattern that picks up the red/brown of the terracotta tile and the darker brown from the glaze. (That whooshing sound you hear is a heavy sigh of relief… nothing like picking out $400 worth of permanent material from a 1×2″ swatch…)

The mister had the laminate installed from the floor to the venthood  for ease of clean-up (vent also MIA, but to-be-installed soon).

A closer view taken without flash.

The back of the weenie chip with product details.

Going with a premium laminate added $25 to the total, but the result is very nice and definitely worth the appeal in this rental market. I’d still like to switch over to ceramic tile counters, but that will probably have to wait until I learn to do the work myownself.

Popularity: 22% [?]

Tags: laminate counters, REI, rent house

 We made it over to the house late last night to check on the tile installation.

Couldn’t get back far enough to get a shot of the entire kitchen without stepping on the newly laid tile.

A slightly different angle

Some preliminary ceramic tile photos:

I’m really liking this terracotta color. The texture on this tile is particularly nice.

A view into the bedrooms– the continuous installation makes the room seems larger.

Popularity: 22% [?]

Tags: ceramic tile, glazing kitchen cabinets, Rehab, rent house

This first purchase tossed us way outside our comfort zone.

Here’s where we were mentally at the time of purchase:

Note: If you notice something missing, leave a comment and I’ll edit the post.

• ARV for the house was 110K.
• Asking price: 100K  
• Offered 82.4K which was accepted without counter. We learned at closing that 2 bids came in the same day and ours was $500 higher.
• We estimated repairs would cost 18K and take 3 months (stop snickering)
•  We planned to reappraise and cash-out refi to pay off the credit cards. The difference would come out of the remainder of our income tax refund.
• Market rent for a 3/2/2 in this neighborhood and school district was $1100-$1200/month. We were hoping for $150+ positive cashflow.

Taken during our 18 month tenure from my favorite spot in the backyard.

Here’s what actually happened: (Numbers are rounded to the nearest hundred)

• Purchase price: $82,400
• Down payment: $0
• Closing costs: $2600 (borrowed from family, paid back with income tax refund)
• Repairs took twice as long to complete- 6 full months, almost to the day
• Repairs and Rehab: $23,700 paid for with credit cards and a signature loan from the credit union (to pay the cabinet guy, tile installers and roofing contractor– less expensive than a cash advance on the credit cards)

Holding costs: (paid out of the monthly household budget)

• Utilities for 6 months: $400
• Mortgage for 6 months: $3900

Fortunately, there weren’t many surprises during the rehab. We blew the budget on upgrades– like switching from the $100 builder grade toilets to the $220 29-golf ball Champion byAmerican Standard (if you know what this is, my condolences… you are one serious rehab junkie). Flooring went from an estimate of $1600 for vinyl peel-n-stick tile to $2900 for ceramic tile.

And so on, and so on…

At the time, I was visiting a forum full of hard-core real estate investors. One of the regulars asked, “Do you intend to keep this house? Then DIRT: Do It Right The First Time” (yes, I know this doesn’t spell dirt, but this guy was really smart and really helpful and very successful and I wasn’t about to correct his acronyms.) “Spend more for durable materials that will last indefinitely. In the long run, you’ll save by replacing less often and reducing the number of repair calls.” So we did and I’m not sorry. (Please note: Not every house will support the level of upgrades we made. If ARV is only 50K, peel-n-stick tiles might be more appropriate.)

Funny How Life Intervenes

After the tree hit the trailer, we refinanced to shave $100 from the monthly payment. At that time (about 7 months after purchase) the house appraised for $120K. We eventually got a check from the insurance company that paid off the signature loan and credit cards. We lived in the house 18 months and quickly found a tenant who signed a 6 month lease for $1100/month. When he moved out, we rented to our current tenants who pay $1150/month. Our cashflow is $400/month… very nice. Recently, we had the house re-reappraised (for 130K) and opened a 30K HELOC to make cash offers on other properties.

So how did we do? I dunno and I’m not sure I want to.  The situation ended up being most unusual.

In every way imaginable it’s been a profitable venture– starting with how much we learned about ourselves, our abilities and limitations and each other. We call the house Rehab 101– much cheaper than college tuition.

Could we have done better? Maybe– but I’m not complaining

Christmas at the rent house. Pretty nice digs for refugees.

Popularity: 11% [?]

Tags: getting started in real estate, real estate investment, REI, rent house

We paid 83K for this 3/2/2 in 2004 with nothing but our good credit rating, an 80/20 loan, and a handful of credit cards. We borrowed enough to pay closing costs from family until our income tax refund came back.

Everyone’s got to start somewhere. I’ve hesitated to show our first purchase because the before pictures are gone-with-the-wind and its hard to imagine how truly hideous this place really was without a visual. The owner inherited the house and lived for years without working plumbing, without ac/heat and without paying taxes. The walls were sherbet green. The clashing  green, builder-grade carpet had never met a vacuum, much less a cleaning. Fiberboard cabinets in the kitchen and bathrooms had disintegrated years before and literally hung off the walls at odd angles.

Much worse than any dirt were the signs of violence– exterior doors kicked in, holes in the sheetrock and interior doors at fist level. Books in the closet were truly upsetting (printing the titles would probably get us flagged by various government agencies that I’d just as soon avoid.) Family photos left on the wall showed smiling mom, smiling dad and smiling children. The juxtaposition of photos and evidence of repeated violence was scary.

Mr. Brz and child-units worked every available day for 6 months to complete repairs. On May 30, the family declared the house finished and we celebrated. Around the table that night, I heard a steady chorus of ‘if I never set foot in that house again, it’ll be too soon.’

On May 31st, a massive oak tree destroyed the trailer we’d lived in for 7 years. Friends arrived on June 1st and moved us into what was intended to be our first rent house in one afternoon. We were very thankful that night

What We Did

Sweetened condensed version: 

• Everything behind the sheetrock was okay– wiring, plumbing, windows, brick
• Everything visible outside the sheetrock had to be rebuilt or replaced– cabinets, counters, faucets, flooring, sinks, toilets, tubs, light fixtures, ceiling fans, air conditioner, heater, and appliances.

Big backyard: I spent most of the 18 months we lived in this house sitting under the far tree and thanking the good Lord we had a place to go. Real estate investment was literally a safe harbor–a cushion in a time of crisis.

We found a local carpenter who built these solid oak cabinets for less than the cost of prefab. We saved by finishing them ourselves. The laminate counters sweep up the wall to form the backsplash.

The mister installed these pedestal sinks  ($110 at HDepot) and beadboard paneling in both bathrooms. It was an economical solution that prospective tenant see as an upgrade.

Ceramic tile throughout makes the house feel larger than 1550 sq. ft. It’s also a breeze to clean between tenants.

As soon as we moved in, we refinanced using OO (owner occupied) financing. The house appraised for $120K. We were able to roll in closing costs and avoid PMI. With the new, lower interest rate our note was reduced by over $100 /month. Today this house rents for $1150, has positive cashflow of $400/month and recently appraised for $130K.

Sweet

Popularity: 14% [?]

Tags: getting started in real estate, real estate investment, Rehab, rent house