Project House Update!! Photos, Expenses, and Projected Rental Income!

  •  
  •  
  •  
  •  
  •  

Liz and I have had a financial (real estate) plan since before we got married. It went something like this:

  1. I pay off my house
  2. She sells her house
  3. We get married (and move into my house)
  4. Use the equity from her house and cash that we’ve been saving (this didn’t take long since we were both working and our expenses were practically nothing) to buy a cheap $80k rental house with cash
  5. Fix it up, rent it out, then save up another $80k (over the course of roughly 2 years) to buy another rental house…fix it up, rent it out
  6. Save up aggressively to buy our long-term primary residence – one with acreage, 4 bedrooms, and 2 bathrooms, and a nice barn for my wife’s future horses

So far, we’re doing pretty good! We’re on step 5, fixing up rental property #2 and hopefully finishing everything by the end of April!

Project House Update – Photos, Expenses, and Projected Rental Income

When I first walked into house #2, I smiled and thought, “This is our house” — not because it was gorgeous and perfect…but because it was exactly the opposite. It smelled like wet dog, cat pee, and smoke all rolled into one obtrusive odor. Sooo…why on earth was I happy about this? I could literally smell a deal. No one other than an investor would want this house, which meant that we could offer far below asking price.

The house was originally listed at $120,000…and eventually made its way down to $99,000. We offered $80,000, settled on $81,000. Buuuut, after the inspection flagged a few more things, we offered $75,000 and they took it.

BOOM! Talk about a deal! You just can’t find a 3 bedroom, 1 bath house for $75,000 anymore. And it was in an awesome neighborhood! I was absolutely thrilled, but I don’t think I fully realized the amount of work that was ahead of us. We bought the house on October 13th. Today is March 30… We’re still not done. And we’re going to have to make a hard charge to complete everything by the end of April, but I think we can do it!

The First 3 Weeks: Demo

The initial plan was to paint the paneling…but we figured that might not get rid of the smell. So, we started taking it down…hoping that the plaster behind the paneling was still solid.

Guess what? It wasn’t.

We tore the house down to the studs. Here’s some pictures to give you an idea of the atom bomb that we created.

Dining Room

Living Room

After those 3 weeks of demo, I think we turned that $75,000 house into a $50,000 house… It was ugly when we bought it, but we sure took ugly to a whole new level now didn’t we??!

The Next 4 Months of Renovation

Between mid-November and now, Liz and I:

  • Re-roofed the garage
  • Hired roofers to tear off and re-shingle the entire house roof
  • Painted the outside shudders and tore down the ugly awnings
  • Tore down the upstairs ceiling, put up new rafters and supports, and re-built a closet that was ready to fall down anyway
  • Re-framed four doorways that were made for midgets (seriously…these doors were framed in at 6 feet tall. I could have hit my chin on the wall while walking through the doorway!)
  • Installed insulation in all the rooms
  • Drywalled the entire living room, dining room, main bedroom, mud room, bathroom, stairwell, and upper bedroom.
  • Had a drywall mudder come and make the walls look seamless and pretty. He did a pretty awesome job, and for pretty cheap too!!
  • Painted every room with primer and two coats of paint (We’re almost there! Just two more rooms to go with the paint.)

Phew!!! Talk about a lot of work! But now, we’re finally starting to see the finish line and are motivated to keep working and get this place wrapped up in the next month or so.

Here’s just a few photos of where we are today so you can see the dramatic difference for yourself.

The Next Items on the List

After painting, we’ll tackle the floors.

Unfortunately, the hardwood was in just too rough a shape to refinish, so we decided that we’ll lay new OSB and then laminate hardwood planking on top of that. (It’s going to look awesome, and hopefully it holds up okay with renters.) Then, we’ll lay laminate in the bathroom and get that sink hooked up again.

Finally, we’ll spend another two weeks on baseboard, window, and door trim.

I’m sure there will be other minor things to do here and there, but we should easily have renters ready to get into this place by the end of May.

How Much Have We Spent on This Place So Far?

With the massive list of things we’ve repaired a rebuilt, I bet you think we’ve spent $30,000-$40,000 on this place!

Nope.

That’s the beauty of tackling projects on your own. Sure, they take a little longer, but it’s much easier on the wallet!!

Here’s where we are on our expenses so far:

project house expense update

Beyond this list, the only other major expense will be the trim. I expect we’ll land somewhere around $91,000 when it’s all said and done. My initial estimate? $90,000. Pretty close.

The Rental Income Expectation

I’ve mentioned it in a couple Facebook videos already (P.S. If you haven’t “liked” my page on Facebook, you’re missing most of these progress updates!!), but we’ve always expected to get $1,300 a month in rent since this house is in such a nice area. So what does this mean from a cash flow perspective? It’s pretty simple.

  • Rental Income: $15,600 a year
  • Property Tax: $3,000
  • Insurance: $600
  • Misc. Repairs: $400
  • Income: $11,600

On a $91,000 investment, this means that we’re earning 13% on our money. I’ll take that ALL DAY LONG. But wait, there’s more! The house will appreciate by 4% each year, which means we’re actually earning 17% on our investment. BOOM, and BOOM again!

Annnnd, there’s actually yet another awesome factor. We have a house that cost us $91,000. Guess what it’s worth once it’s done? $140,000. Looks like we just increased our net worth by $50,000 in less than a year’s worth of side work.

Yeah….I’d say this project was worth it!

So what do you think of this house project? Have you been tracking us? What has been your favorite part of it all?

If you enjoyed this article, Get email updates (It’s Free!)


  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  

14 comments to Project House Update!! Photos, Expenses, and Projected Rental Income!

  • Emily

    I like the future horse plan!

  • Denise Fetting

    I have really enjoyed all of your before and after photos and following your progress on your rental house. I wish all young people were as practical and savvy and had such good money sense as you. I admire that in you and that is why I think I started following you. You are smart, practical and not afraid of a little hard work. I work in a high school and most kids don’t want to work for anything anymore. They want everything handed to them. Your work ethic and drive are refreshing. I wish you continued success in all you do and I look forward to following any future projects should you decide to share them with us. Take care and keep up the good work, I have enjoyed following the journey.

    • Wow, thanks Denise! Yeah, my parents taught me a lot, but probably one of the most important was the value of hard work. They didn’t just talk about it, they did it. I knew very early on that if I wanted money, I was going to have to work for it. Today, it’s just second nature. I know that if I want to get ahead in my job, in my business, in my marriage, in anything – I’m going to have to work hard for it.

  • Wow! Incredible work and renovations.
    It looks like a whole new person/house. Great job, project, investment. You should be very proud!

  • good luck on the rehab. Cool to see the before pics. I just sold a 4-plex and bought another that is pretty beat up. Closing next week, then doing rehab one unit at a time…good motivation to see your rehab project.

  • Looks like quite the project. All the work you are putting into it will pay off in the end!

  • Jane

    What city is this? I need to move there. $75k for a house is cheap compared to the normal $750k houses around here. Ha.

    • Well, first of all the house was a complete disaster. It’ll be worth $140k when we’re done, but yeah, still cheap vs. your $750k! West Michigan, baby! An awesome place to live – cheap cost of living and pretty decent wages! Makes for a pretty easy life!

  • Jane

    Ahhhhhh…..unfortunately too cccccccold in my book. 🙂 I have friends that moved here from Ann Arbor and never want to go back. We spoiled with So. California’s weather and Disneyland. Love your blog. Definitely makes me want to downgrade into a smaller place so that it’s completely paid off. Then I’d have all this extra money to splurge and go crazy!! J/k. I meant save and invest like what you’ve been recommending. Making money work for me rather than being a slave in working forever. Thank you for what you do!!

    • What do you mean?? It..wait…that’s right…it snowed today…on April 16. Good point.

      Ha, love it. I’m learning slowly actually. Money isn’t just for saving and investing – it’s for spending and enjoying too! So yeah, do a little of both, but definitely don’t let it own you for life! Thanks for reading Jane!

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

  

  

  

CommentLuv badge