Anatomy of a 100% IRR real estate deal from cradle to grave

[ljean]

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.

		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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