In Part 1, I detailed how clueless I was in real estate investment, but took an opportune risk and purchased a foreclosure as my first investment property that presently generates a ROI of >50%. In this part 2, I will detail:
- Condition and details of the property
- Cost of the property / Cost of renovation
- After the renovation
- Lease price throughout the years
- Photos of the property
The property was a two-story single-family home built in 1981 about 2641 sq ft, 4 bedrooms all upstairs, 2.5 baths, 1 family room, 1 living room, 1 dining room, and 1 game room upstairs. It was foreclosed due to a divorce and was in the market for a little over two months. The property was…. you guessed it…a f@#*ing disaster.
- The front yard was grass-less and ground was cracked due to lack of water,
- trees were so overgrown that it covered the house (looked like a haunted house at night),
- ceiling in the kitchen was collapsed due to flooding in 2nd floor master bathroom,
- house smelled like shit due to flooding,
- holes on the wall throughout the house and the garage (must had been some MMA fighting in the house)
- mold in the garage
- paint was awful and dark
- active termites around the fence and kitchen
- grass in the backyard was taller than me
- fence was old and fallen
Scary as the property was, for some un-explainable reason I did not walk away. Could have been that I was so eager to own a property and needed to put my saved-up money to work! What I liked about the house was the space, lots of storage, the huge lot, the huge front and backyard and the feng shui (as I am Asian). There was definitely potentials for the property to be a great rental. The owner had started a project to extend the house but did not finish. It seemed that he was trying to build a large entertainment area above the garage. This added about another 350 sq ft.
The original listing price was $100,000. It came down to $90,000 after being in the market for two months. Can you imagine finding a property like that today? Probably rare to none. I received advice to ask for $70,000 (didn’t hurt to start at that price). Generally, asking for too low of an asking price from the listing price is not a good idea, but since that time was a buyers’ market, it was a foreclosure, had been in the market for over two months and I offered cash, I had some room to negotiate. Unlike today, you cannot ask for that kind of asking price, even if the property is in that type of condition. The bank countered back with a price of $80,000. I accepted that price and purchased my first property!
I wasted no time in searching for contractors. I had three quotes and the best quote was $24,000 with a two-month timeline. Although I didn’t know much about renovations, but knowing the conditions of the house and everything that had to be done, that price was a spectacular deal. I could not be at the property to monitor the work and progress of the contractors (what the hell would I know anyway) as I have my full-time job to attend to, so I asked an acquaintance to help oversee the project. His compensation was the first month’s rent. To my surprise, of course with some pushing, the contractors finished the job on time. For the record, the quality of their work was not superb but it was adequate for the price that they charged.
I rented out the property in a week after the renovation was completed. This family was a friend of the acquaintance that I asked to oversee the project. In fact, this family wanted to purchase this property from the bank but was not able to finance. They have a family of 7 so they wanted a big house. I rented out for $1200/month, which was a little low, but hey, I had nothing to complain. I didn’t have to spend much time at all to look for a tenant .
I suppose you want to know how the property turned out. Well, I gotta say that it turned out remarkably marvelous. It was no longer a 4-bedroom. I turned it into an airy 6-bedroom (all upstairs) mansion (really, it does look like a mansion, an old-ass mansion). So after the renovation, the property turned out to be a two-story house about 2991 sq ft, 6 bedrooms (2 master bedrooms), 2.5 baths, 1 family room, 1 living room, 1 dining room, and 1 game room upstairs, all laminate.
Rent price throughout the year:
- 2009 to 2010 - $1200
- 2011 to 2013 - $1500
- 2014 to 2015 - $1600
- 2016 - $1800
- 2017 - $2000
- Property was a disastrous disaster – It was pretty terrible
- Clueless did a marvelous job renovating the property for $24,000 – All you need is desire and motivation and you can do anything
- 2641 sq ft home with 4-bedroom became a 2991 sq ft home with 6-bedroom – Anything can be done
- Rent amount from 2009 to 2017: $1200 to $2000 – not bad
- If clueless can take a renovation project on her own, so can you!!! – again, desire and motivations
Preview for next article:
I hope you enjoyed reading the article. Provide any feedback, suggestions, advice. Thank you for reading and have a good one!
Disclaimer: All content is the opinion of the author. No investments is guaranteed to generate income. Please do your own research before you jump into anything crazy.