Gem Rental Properties New projects

Gem Rental properties is our latest venture into the world of Cash Flow Real estate investing. You can read about this in the articles on the left of this page. This is the next house we are re-habing.

We purchased this REO property in August from a bank. It is a 2 bedroom, one bath home. About 1200 square feet.

For more before pictures http://towardswealth.com/node/4024

We plan to re-hab the house at a cost of $10,000. The city made us rebuild the meter loop at a cost of $1,400. You can expect more of this requirement as cites upgrade to smart meters. We will texture and repaint all the walls and ceilings. The kitchen cabinets will be repainted and they will get new counter tops. We removed an extra door that went to a bedroom so that more kitchen cabinets could be added.

The hardwood floors will get sanded and resurfaced. Windows will be painted and re pointed. All light fixtures, plumbing fixtures will be replaced. Smoke detectors will be added. A new hot water heater and a new wall mounted A/C unit will be added. Outside will get siding repairs, a new patio cover, a new garage door, a new patio slab, the storage room floor repaired and maybe a new front door. Fences repaired and landscaping will be cleaned up.

The house will rent for $750 a month. The total cost with repairs about $35,000 annual income $9.000 Taxes are $1,200 a year,  insurance is $650 Net income is $6,650 a year. Property value based on comparables is estimated to be $75,000 (after the rehab work is done). That will give us a 20% annual return cash on cash.

We will refinance the house to take out $40,000 cash to do another house. The payments on this loan are estimated to be $334 a month. Our net cash flow will be $2,640 a year after refinancing. As we will have no cash in the deal after refinancing the return is 100% a year cash on cash.

Work was started on 11-20-2011 we will rent the house on 12-10-2011 (occupancy starting 1-1-2012)

for $700 a month, a $300 deposit. The rent will increasing the second year to $750. a month. Having a tenet to move in right away is worth taking the $50 off the first years rent.

Before and after pictures.

kitchen before: We removed the cabinet doors for painting. And replaced the counter top.

kitchen after: We closed off an extra door way to make another closet the in master bedroom, we added a vent-a hood, and drawer base cabinet between the stove and ice box. We repainted all of the house, the  kitchen now has recessed lighting. We added additional wall plugs. Gfi's and new floor tile, water cut offs where added at the sink.

Bedroom before: Extra door way went into the kitchen.

Bedroom after: We added a closet where a door to the kichen was, this picture is before painting.

Before: View from kitchen looking into Living room.

After: Kitchen looking into Living room, note change in colors.

We purchased two more houses in August that I will write about as we start the remodeling work on them. Both cost less then $30,000.