Investment property #2 numbers & details
Today my husband and I closed on our 2nd investment property! I want to share the exact specs and numbers with you. I tend to be a no fluff kind of mama, so my blog posts will get right to the point for you! Here goes:
We purchased a 1952 all brick home that was completely renovated on the inside just last year. I’m talking gut job, reworked the entire floorpan, plumbing, electrical, crawlspace - the works. The outside still needs love, but it has all of the potential to be really cute! To protect our investment we will need to get new gutters, soffit and fascia and some fence repair right away. We will also add shutters and complete the concrete work on the drive way and sidewalk. Eventually we will also paint the exterior, upgrade the front porch to a nice sitting area and add a picket fence across the front.
It is a 2 bed, 2.5 bath home perfect for college students with just under 1100 sq ft. The area we bought in is up and coming, and a mere stones throw away from Austin Peay State Univeristy Campus. There is a lot of revitalization in the works on the other side of the neighborhood, so we do believe this property will eventually be a perfect AirBnb (we shall see!).
Since I am a realtor and represented the transaction I was able to put most of my commission toward some of our Closing Costs. The home was originally priced at $230,000. We initially put in an offer at $215,000 but settled on $224,000 since it had just came on the market. After inspections we decided to “walk away” once we learned that redoing the driveway alone was going to cost about $12,000. When we notified the seller of our decision to terminate, they wanted to negotiate and stay in contract. This was good news for us! Since we really wanted to get the concrete work done, but didn’t want to have to pay cash for it our negation looked like this: instead of lowering the sales price we kept it at $224,000 and had him pay $11,000 into an escrow account. This essentially brought the price of the home down to $213,000.
An escrow account is an account held by a neutral third party. The holder of the account, which happens to be the Title Company, will pay the concrete company when the work is complete.
At the end of the day our monthly mortgage payment is $1207 which includes insurance and property taxes. Since we put 25% down we do not have to pay PMI (property mortgage insurance). We have the property listed for $1500/month. We may not get that much, and that is okay. With everything being new in the home we know there should not be any upcoming repairs to plan for. As long as our mortgage is paid for then our plan is working.
Of course all investors love to cash flow off a property. If we rent the home for $1500 we would be cash flowing $293/ month which is $3516 per year of rental income.
The real value we find in this home is the room for appreciation. The area behind the neighborhood has all kind of plans in the works such as a baseball stadium, farmer’s market, small business hub, and a baseball field. It will take a few years to complete the projects, but when they are done the home will jump in value. You know you are getting in at a good time in a neighborhood when every few houses you see a new one being built, one being flipped and one with shuttered windows. This screams OPPORTUNITY! Knowing what is going on in the city you invest in is extremely important.
Questions about how to make this work for your family? Let’s chat and put a plan together. It does not have to be a “this year,” plan. Let’s get something in place that makes is possible for your to start your journey in 2025, or 2026. Do not let time fly on you without being mindful of where you are going. Get in touch, let’s do this!
