PHEW! It was a crazy January! I’m just now feeling the literal dust settle after that whirlwind of a project. If you follow us on Facebook or Instagram, you know what I’m talking about…if you don’t, then you’re probably like, huh?! (Why aren’t you following us?!)
Short story: I was rehabbing a townhouse to get it ready for new tenants.
Long story: WAY back in 2016, I bought my first real estate investment, a townhouse in Golden Valley. You have read that story here. While I was working on that house, I befriended the neighbor, an elderly gentlemen who was super impressed that a girl with a baby on her back was doing such great work next door. We stayed in touch over the years, and he expressed to me on several occasions that he wanted me to be his real estate agent and sell his house when the time came. After several discussions with him, we decided it would be a better plan for me to buy his house and have him stay there as a tenant. This would allow him the flexibility to live there independently until he needed the extra help of assisted living, but he wouldn’t have to worry about making repairs or putting his house on the market should a major health issue arise.
I closed on that house in May of 2018 and he rented from be until the end of the year. I bought the house for $120k which was a bit below market value for the condition, but in this situation, all parties were happy about the price and terms of the deal. He rented for $1200/mo which covered my mortgage and HOA costs, but not much more. Since I didn’t have any maintenance, updates or repairs, this deal was okay in the short term.
When I take on an investment project, I’m always looking for a WIN/WIN/WIN. I want the buyer and the seller and the end buyer or tenant to be happy with what they are getting, so I work really hard to educate everyone involved on the choices they have and what goes into the pricing for the condition. If they could make more money doing things differently, I always explain that, and let them make the decision about how to proceed based on what works for them. The nice thing about being a real estate broker is that if I am not the right buyer for the property, I can also help them sell it on the market, and/or I probably know a buyer(s) that I could connect them with, too!
After he moved out in December, it was time to renovate the place.
As you can see, it was 1974 vintage EVERYWHERE!
The PLAN
As a landlady, my strategy is to fix up everything BEFORE tenants move in so I don’t have to deal with maintenance calls and repair issues. I tune up the furnace and AC, clean ducts, remove all carpeting and put down maintenance free LVT, get new appliances, lighting, faucets, and paint EVERYTHING.
Here we are on day 5:
Having a fully updated unit also allows me to charge top of market rent, which I believe attracts better quality tenants. I weed out bargain shoppers by being a touch higher but also offering a better quality unit that good tenants are willing to pay for.
On my first townhouse, I wanted to DIY everything, so I could learn how much stuff costs and how long it should take. That project took me 6-7 weeks and cost about $16k. I worked day and night and long hours and was pretty stressed out for most of it. For this project, I wanted to get a new tenant in ASAP so I knew I would need some help. I set a budget of $15k and decided to hire out flooring install, plumbing, electrical, appliance install, fireplace service, and window replacement. I also paid my assistant to help me paint. By leveraging my time and spending a bit more money to hire others, I was able to stick to my budget but get the work done in a speedy 4 weeks!
Here we are, getting dirty!
If you’ve done a project like this before, you know it can really easily take over your life and use up all of your free time. Since I would like to continue to do projects like this, It was important to me to maintain our regular family schedule (Mom-time in the mornings until bus stop and mom time until bedtime in the afternoons) in this project, I locked up at 3pm everyday and only worked two Saturdays the whole month. Not only did this preserve our family’s sanity, it taught me a bunch about prioritizing of time and how to get things done efficiently.
I’ve always felt that the work will get done when it HAS to be done, so in this case, I scheduled an event at the townhouse at the end of the month. and set some work hours for myself. I worked hard to stick to my schedule. Believe it or not, it all got done, pretty much right on schedule! The project wasn’t completely done for our event but it was done enough that people could see about what it would look like when it was done.
Side note: We’ve been hosting events lately so we can teach you guys what we know about a given topic. We’ve done hiring contractors, investing in real estate, buying your first house, and we’ve got being a real estate agent and selling mom and dad’s house coming up! If you haven’t made it to one of our events yet, check them out. It’s a great way to learn a little something and meet up with some like-minded people!
Finding tenants
Since I’ve been doing this landlady thing for a few tenant turns now, I’ve found that using Zillow to post rentals gives me a ton of results! I usually try to post them about 60 days ahead of time but for this one, I only had about 30 days notice. Fortunately, I had pictures from my other unit and I was planning on similar finishes, so I used those photos to post the rental for this unit and I had a TON of interested tenants almost right away.
In my experience, the toughest part of about being a landlady is dealing with interested parties. I usually get between 10-30 email inquiries a WEEK! I add all of them to a list and let them know I’ll be in touch when I have showing information. I usually hold one or two, one-hour open houses and that’s it. I would go crazy trying to schedule at other people’s convenience so this is another filter I use to weed out candidates who might not fit; if they need special treatment for showings, what other kind of special requests might come up during their tenancy? (This may sound harsh, but it’s based on experience!)
If a particular candidate is feeling really excited about the unit and wants to apply before even seeing it, I allow it. I like to have 2-5 applicants so I can pick the best one based on their particular situation, both financially and based on the length of lease and their desired move-in date. I use Cozy to screen and manage applicants and also to handle deposits and rents during the term of the lease. It’s free and super easy to use.
For this situation, I ended up with 3 tenants I liked, and 1 that I knew was the best fit BEFORE I even showed it to them. At the open house, I met with each of them and discussed their move in plans and made a decision based on that. The new tenants moved in on February 8th and I was free to clean up and relax a bit before taking on the next project! (Details coming soon on that!)
I’ll bet you’re dying to see how it turned out!
Here are the AFTER photos:
What we did:
We freshened the whole place: painted ceilings, new light fixtures, all new outlets and switches, new flooring throughout, painted cabinets and rearranged them a bit, new countertops and appliances, new fixtures in the bathroom and a new tub and tile shower surround, plus a good hard scrub down before tenants moved in. It turned out great, if I do say so myself.
This unit rents for $1600/month now and I was able to refinance my original mortgage after the repairs were done (new appraised value of $185k!) and pull out all my cash invested. Now I have a townhouse that cash flows every month and my down payment and repair costs are back in my pocket and ready to spend on the next project!
It’s a wrap!
If you’re interested in becoming a landlady (or landlord) and want to discuss it in person, shoot us a message, we love helping investors get started!
Thanks for reading!
XOXO,
Amy Ranae