In this episode I talk about how much I make on a $23,000 property I bought out of state during quarantine! I break down the purchase price, renovation costs, income, and expenses. Enjoy!
✅ Check out our out-of-state real estate investing course Remote Rental Riches – https://courses.digitalnomadquest.com/p/remote-rental-riches which teaches you step-by-step how to acquire your first rental property!
How Much I Make on a $23,000 Property (Buying Cheap Properties)
Transcription
Below is a transcription of the podcast. This transcription was taken from Otter.ai so it might not be completely accurate:
Sharon Tseung 0:00
Hey guys, it’s Sharon from digital nomad quest. And today we’re gonna talk about how much I make on a property that I purchased at $23,000. And if you guys are new to this channel, welcome, I’m all about teaching y’all how to build passive income, become financially free and design your best lives. So if you guys are interested in that, make sure to subscribe and hit the bell button to be notified of my latest videos. So I briefly covered this property before on my channel. But basically, I purchased this property at $23,000, finding it on bigger pockets, actually. So I found this deal there. And I connected with a wholesaler, they sold it to me for 23 K, but it was actually listed at 25 K, it was an off market deal, I saw that nobody had purchased it for a long time. So I thought why not try to negotiate and I ended up getting it at a good price, I decided that because of such a low price, I was gonna pay all cash for it, I won’t have to worry about mortgages or anything like that. And they already had tenants in there for about 20 years, actually. So they had been there for a long time. And I was hoping that I could just keep those existing tenants not have to worry about repairs or anything like that and just purchase a property. Turns out, they signed a lease for another place. So they were paying $400 a month. So I wasn’t going to be able to have those tenants because they’re going to move somewhere else, which kind of sucked because I knew the repair costs were going to be a lot. So that’s a little bit of the backstory, I ended up having a property management company deal with a lot of the repairs for me, and then I paid whatever it costs. So they helped arrange everything for me, actually. And basically, I purchased at 23 K closing costs around $1,000. So exactly, I paid $23,936.57 all cash after closing costs. So as a tip, make sure that every time you’re purchasing a rental property and you’re doing your analysis, you make sure you include your closing costs. In your analysis. Generally, I would say closing costs are usually around 2%. But it really depends on the price of your property. Now I paid $33,360.60 for the full rehab. When I purchased this, I thought it was gonna be around 22 k rehab, the estimates kept getting higher, and I was like, Oh my gosh, I’m gonna pay so much money 33 k ended up being Alright, though, I think it ended up being a good deal for what it ended up looking like. So here’s a few pictures of what it looks like. As you can see is very rundown, right? And now, it looks a lot nicer.And when I saw it, I was in disbelief. I thought you know what I’m actually very proud of this project, I never dealt with a fixer upper. Granted, I didn’t have that much say in like what everything looked like because they had a whole system figured out I just kind of approved different repairs and different changes. But for my first project, I was still pretty proud, they ended up being able to get a tenant in for $195 a month, which was beyond my expectations. As you can see, that was more than double what the previous tenant had paid. Right. So here’s another tip, if you’re looking for a rental property, sometimes it’s better to get one that’s a little more rundown, but in a good area, and then fix it up and then really boost the value of the property and just kind of make it into rent ready condition. I think the way this property ended up being it exceeded my expectations in a sense of they got it passed rent ready in my in my opinion, I pay about $155.42 for property taxes and insurance. And then property management fees are 10%. So usually property management companies can vary from like six to 10%, I was able to find some that were around 8%. But I ended up going with this company because they were really good about everything. When I was on the phone with them. They had a lot of different procedures in place. And it had really good reviews. So I thought I could trust them. So subtracting $155.42 and $89.50. From the 195, I end up with $650.08 per month profit. Now this is including repairs and vacancy and things like that. But I’m very pleased that it already hit 650 after that. So for something I ended up putting $57,297.17 and all cash, I think $650 a month is pretty good, especially because I don’t have to pay off a loan. It’s very risk free. Now I just can set it down and make money passively. I would have to say that for this first year. I basically think of it as like a seasoning period. That’s what a lot of people say that when you purchase a rental property. There’s a one year seasoning period because there’s going to be unexpected surprises and things like that. So like recently, I had to deal with AC unit issues, we ended up fixing up the insulation for the house in the attic. And that cost around 2000 or so. But it’s all expected in my opinion for that first year. Besides that it’s been Alright, so that 650 is what I’m going to expect in the future. Now in your analysis, you should always a lot 5% for vacancy, and 10% for repairs. So with 5% and 10%. It’s basically about $134.25 and subtracting that from $650.08. I’m left with $515.83 per month that I cashflow. If I’m accounting for those two expenses, I’m hoping that long term, it’s not going to have too many issues, especially because we did a full rehab, they shouldn’t have constant issues in the future. So with this property, I’m very proud of it in the last week or so actually another property listed in the same street for over $100,000 with the same Bedroom Bathroom combination. So mine is a three bedroom, one bathroom, my house is less than square footage, but I can see that my property is probably valued between 80 and 100. k, just from the repairs and everything like that, as well as appreciation just overall in that target market, I’ve seen that the values have gone up a lot. And that’s all because I picked a market that had increasing job growth, increasing population growth, lower crime rates, everything like that, that hadn’t mentioned in a previous video, make sure to check that one out about researching target markets. So that’s very crucial when it comes to appreciation if you’re trying to profit in that way. So as you can see, I’m profiting from cash flow as well as appreciation, which I think is very powerful. And what that’s why I choose real estate investing because I think it’s really fun, as well as its strong way to really grow your wealth. So it’s a really good deal that you know, I put an all cash 57 K and end up with a property that’s already probably valued at 100 K, right. So if I sold it now, I would already profit. But I’m gonna hold this long term because I have faith that this market will increase in value. I find that during this time, a lot of people from California or moving to Texas, and Texas where I invested with this property, I do feel like because of this, things are gonna increase in Texas home prices, in my opinion are going to increase especially in areas around Austin, a lot of people find Austin as a hot market. But we’ll see in the future, we’ll see what happens. But yeah, so this is my story of essentially how much I make on a property I purchased at $23,000. I’m super happy about how it turned out. I’ve never even seen this property which is crazy to me. I have visited that city, but I’ve never actually been to this property. So as you can see, you can totally do long distance real estate investing. Without seeing the property I probably would recommend going to visit first especially for your first time when you’re investing but in the future as you get more experienced if you do the numbers if you have the right dream team that you can count on you can actually probably do it without even looking at it but again, I don’t recommend doing that I would recommend actually going and visiting the property Alright, so let me know what you guys think about the deal I purchased here let me know if you guys think it’s a good deal or a bad deal. And if you guys like this video, comment below, let me know what you guys think and subscribe hit the bell button to be notified of my latest videos and I’ll see you guys in the next one.Transcribed by https://otter.ai
Hey guys, it’s Sharon from digital nomad quest. And today we’re gonna talk about how much I make on a property that I purchased at $23,000. And if you guys are new to this channel, welcome, I’m all about teaching y’all how to build passive income, become financially free and design your best lives. So if you guys are interested in that, make sure to subscribe and hit the bell button to be notified of my latest videos. So I briefly covered this property before on my channel. But basically, I purchased this property at $23,000, finding it on bigger pockets, actually. So I found this deal there. And I connected with a wholesaler, they sold it to me for 23 K, but it was actually listed at 25 K, it was an off market deal, I saw that nobody had purchased it for a long time. So I thought why not try to negotiate and I ended up getting it at a good price, I decided that because of such a low price, I was gonna pay all cash for it, I won’t have to worry about mortgages or anything like that. And they already had tenants in there for about 20 years, actually. So they had been there for a long time. And I was hoping that I could just keep those existing tenants not have to worry about repairs or anything like that and just purchase a property. Turns out, they signed a lease for another place. So they were paying $400 a month. So I wasn’t going to be able to have those tenants because they’re going to move somewhere else, which kind of sucked because I knew the repair costs were going to be a lot. So that’s a little bit of the backstory, I ended up having a property management company deal with a lot of the repairs for me, and then I paid whatever it costs. So they helped arrange everything for me, actually. And basically, I purchased at 23 K closing costs around $1,000. So exactly, I paid $23,936.57 all cash after closing costs. So as a tip, make sure that every time you’re purchasing a rental property and you’re doing your analysis, you make sure you include your closing costs. In your analysis. Generally, I would say closing costs are usually around 2%. But it really depends on the price of your property. Now I paid $33,360.60 for the full rehab. When I purchased this, I thought it was gonna be around 22 k rehab, the estimates kept getting higher, and I was like, Oh my gosh, I’m gonna pay so much money 33 k ended up being Alright, though, I think it ended up being a good deal for what it ended up looking like. So here’s a few pictures of what it looks like. As you can see is very rundown, right? And now, it looks a lot nicer.And when I saw it, I was in disbelief. I thought you know what I’m actually very proud of this project, I never dealt with a fixer upper. Granted, I didn’t have that much say in like what everything looked like because they had a whole system figured out I just kind of approved different repairs and different changes. But for my first project, I was still pretty proud, they ended up being able to get a tenant in for $195 a month, which was beyond my expectations. As you can see, that was more than double what the previous tenant had paid. Right. So here’s another tip, if you’re looking for a rental property, sometimes it’s better to get one that’s a little more rundown, but in a good area, and then fix it up and then really boost the value of the property and just kind of make it into rent ready condition. I think the way this property ended up being it exceeded my expectations in a sense of they got it passed rent ready in my in my opinion, I pay about $155.42 for property taxes and insurance. And then property management fees are 10%. So usually property management companies can vary from like six to 10%, I was able to find some that were around 8%. But I ended up going with this company because they were really good about everything. When I was on the phone with them. They had a lot of different procedures in place. And it had really good reviews. So I thought I could trust them. So subtracting $155.42 and $89.50. From the 195, I end up with $650.08 per month profit. Now this is including repairs and vacancy and things like that. But I’m very pleased that it already hit 650 after that. So for something I ended up putting $57,297.17 and all cash, I think $650 a month is pretty good, especially because I don’t have to pay off a loan. It’s very risk free. Now I just can set it down and make money passively. I would have to say that for this first year. I basically think of it as like a seasoning period. That’s what a lot of people say that when you purchase a rental property. There’s a one year seasoning period because there’s going to be unexpected surprises and things like that. So like recently, I had to deal with AC unit issues, we ended up fixing up the insulation for the house in the attic. And that cost around 2000 or so. But it’s all expected in my opinion for that first year. Besides that it’s been Alright, so that 650 is what I’m going to expect in the future. Now in your analysis, you should always a lot 5% for vacancy, and 10% for repairs. So with 5% and 10%. It’s basically about $134.25 and subtracting that from $650.08. I’m left with $515.83 per month that I cashflow. If I’m accounting for those two expenses, I’m hoping that long term, it’s not going to have too many issues, especially because we did a full rehab, they shouldn’t have constant issues in the future. So with this property, I’m very proud of it in the last week or so actually another property listed in the same street for over $100,000 with the same Bedroom Bathroom combination. So mine is a three bedroom, one bathroom, my house is less than square footage, but I can see that my property is probably valued between 80 and 100. k, just from the repairs and everything like that, as well as appreciation just overall in that target market, I’ve seen that the values have gone up a lot. And that’s all because I picked a market that had increasing job growth, increasing population growth, lower crime rates, everything like that, that hadn’t mentioned in a previous video, make sure to check that one out about researching target markets. So that’s very crucial when it comes to appreciation if you’re trying to profit in that way. So as you can see, I’m profiting from cash flow as well as appreciation, which I think is very powerful. And what that’s why I choose real estate investing because I think it’s really fun, as well as its strong way to really grow your wealth. So it’s a really good deal that you know, I put an all cash 57 K and end up with a property that’s already probably valued at 100 K, right. So if I sold it now, I would already profit. But I’m gonna hold this long term because I have faith that this market will increase in value. I find that during this time, a lot of people from California or moving to Texas, and Texas where I invested with this property, I do feel like because of this, things are gonna increase in Texas home prices, in my opinion are going to increase especially in areas around Austin, a lot of people find Austin as a hot market. But we’ll see in the future, we’ll see what happens. But yeah, so this is my story of essentially how much I make on a property I purchased at $23,000. I’m super happy about how it turned out. I’ve never even seen this property which is crazy to me. I have visited that city, but I’ve never actually been to this property. So as you can see, you can totally do long distance real estate investing. Without seeing the property I probably would recommend going to visit first especially for your first time when you’re investing but in the future as you get more experienced if you do the numbers if you have the right dream team that you can count on you can actually probably do it without even looking at it but again, I don’t recommend doing that I would recommend actually going and visiting the property Alright, so let me know what you guys think about the deal I purchased here let me know if you guys think it’s a good deal or a bad deal. And if you guys like this video, comment below, let me know what you guys think and subscribe hit the bell button to be notified of my latest videos and I’ll see you guys in the next one.Transcribed by https://otter.ai
