Last week, I released episode 2 of The Real Estate Investor Web Series, a reality-style show that follows my business partner Shauwn and I as we acquire rental real estate.
We caught up with our contractor, Vernon, as he worked on Glendora; walked through Blue Lake, our latest acquisition; and made a decision on another property that we had under contract.
Blue Lake House Specs
Blue Lake is a 3 Bedroom, 2 bath rental property in San Antonio, TX. It was a HUD property that we located through one of our realtors.
This is my favorite house yet because it’s in a great neighborhood and the numbers are sweet.
It was in good enough shape that we could have rented it out “as-is”; but we stuck to our business model of “fix everything” to make sure that we had the best product at the best price.
We bought this property for $47,400, which is about half the after repair value (ARV) of $92,300. I used to doubt my mentors when they claimed that you could buy real estate at 50 cents on the dollar; but we’re doing it all day long!
The rehab cost us $12,300 to complete; and the house is already rented.
Closing costs included lender fees, title fees, etc.
$47,400 – Purchase Price
+$12,300 – Rehab
+$ 3,200 – Closing Costs
=$62,900 – All In
One of the reasons I really love this house is the big equity capture. We are sitting on almost $30,000 in equity from day 1.
I can’t stress this concept enough to people. The day you buy a piece of real estate (correctly), it instantly increases your net worth. Shauwn and I increased our net worth by $15,000 each the day we bought this property.
A year from now, we will sell the house to capture the equity and roll it into the next deal. We expect to pay about 7% in realtor and title fees, so that will bring the profit to around $23k.
$92,300 – After Repair Value
-$62,900 – All In
=$29,400 – Equity Capture
-$6,461 – Realtor & Title
=22,939 – Projected Profit
Cashflow is the #1 reason we invest in real estate. It’s the passive income that I talk about on this site. By adding $320 a month to the $338 we are already making from Glendora, we are already clearing $600 a month in passive income.
My half of the cashflow is $300 a month, which is going to easily cover my internet, electricity, Netflix, and web hosting bills.
Monthly Cash Flow
$850 – Rent
$530 – Expenses
$320/mo. – Cash Flow
Don’t hesitate to leave comments or ask questions!