The following is a breakdown of a real estate deal I recently completed. House was bought in 2017 for $55,000 for cash. It was in pretty decent shape at that time, we spent about $6,000 to get it ready for first occupancy for pretty much just new interior paint & carpet. This was a good buy, better than average. After a year I refi'd to pull cash out for an unrelated investment; it appraised for $135,000 and I was able to get 80% of value around 5% interest. The tenant moved out right after that so we had to spend another $5,000 to clean it up and re-rent. After a few months the new tenant bailed so I decided to sell. We spent another $9,000 to get it ready for sale. My Realtors CMA came in around $100,000 but I told him he was crazy. We listed at $159,900 and it went pending at list price in a couple days. Sale netted me $36,000 after all selling costs & mortgage payoff. This was completely hands-off aside from the initial purchase. After I bought the house I never saw it again; my property manager handled all the rental & rehab. The math works out to 119% IRR.
My opinion on straight up rentals is they dont make sh*t when you factor in turnover, maintenance, management, capital expenses, etc. You make the money when you buy right but have to wait until you sell to get paid. I pretty much sell any house I've owned > 1 year when it comes vacant.
| Major | |||||
| Purchase/Refi/Sale | Repairs | Interest/Tax | Operations | Net | |
12/1/2017 | $ (54,102) | $ (54,102) | |||
1/1/2018 | $ (4,668) | $ (1,113) | $ (5,781) | ||
2/1/2018 | $ (1,407) | $ (781) | $ (741) | $ (2,929) | |
3/1/2018 | $ 802 | $ 802 | |||
4/1/2018 | $ (291) | $ (291) | |||
5/1/2018 | $ 1,155 | $ 1,155 | |||
6/1/2018 | $ 1,154 | $ 1,154 | |||
7/1/2018 | $ 1,258 | $ 1,258 | |||
8/1/2018 | $ 1,076 | $ 1,076 | |||
9/1/2018 | $ (808) | $ 1,156 | $ 348 | ||
10/1/2018 | $ 1,248 | $ 1,248 | |||
11/1/2018 | $ 1,280 | $ 1,280 | |||
12/1/2018 | $ 107,457 | $ 892 | $ 108,349 | ||
1/1/2019 | $ (4,883) | $ (498) | $ - | $ (5,381) | |
2/1/2019 | $ (497) | $ 449 | $ (48) | ||
3/1/2019 | $ (1,304) | $ 1,256 | $ (48) | ||
4/1/2019 | $ (495) | $ 1,365 | $ 870 | ||
5/1/2019 | $ 36,655 | $ (9,166) | $ (494) | $ 1,067 | $ 28,062 |
6/1/2019 | $ 16 | $ 1,256 | $ 1,272 | ||
7/1/2019 | $ 10 | $ 10 | |||
| $ 90,010 | $ (20,124) | $ (4,877) | $ 12,013 | $ 78,304 |
My opinion on straight up rentals is they dont make sh*t when you factor in turnover, maintenance, management, capital expenses, etc. You make the money when you buy right but have to wait until you sell to get paid. I pretty much sell any house I've owned > 1 year when it comes vacant.
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