The Details of The Glendora Deal

From the Genius Types archive. Originally published April 9, 2010.

Last week, I released The Real Estate Investor Web Series, a reality-style show that follows my business partner Shauwn and I as we acquire rental real estate. The episode focused on the Glendora Deal, a nice little bread and butter rental property in San Antonio.

People loved the video, but they wanted to see more details… I’ll list as many as I can below, but I won’t remember them all; so please comment with more questions.

House Specs

Glendora is a 3 Bedroom, 1 bath rental property just west of I-35 in San Antonio. We located the deal through one of our realtors.

We liked the neighborhood because it was close to where we work (you can see it from our the window of our 6th floor office); and it is centrally located next to some major job-generating developments.

Rents were strong enough in the neighborhood to support cash flow for our company as well as payments to our private lender.

Acquisition Costs

We got this property way below market because of the speed at which we were able to act. Buying it for $35,500 when it is worth $68k+ in good condition protects us in a lot of ways.

The rehab is already done and cost us $12,000 to complete. The phone has been ringing off the hook from tenants wanting to live there, so I’m sure our rental guy already has it rented out.

$35,500 – Purchase Price
+$12,000 – Rehab
+$ 1,000 – Closing Costs
=$48,900 – All In

Equity

This nice little house instantly created about $20,000 in equity for our company and our investors. One of the really great things about buying real estate correctly is that it changes your net worth from day 1.

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 $14k.

Equity Capture

$68,250 – After Repair Value
-$48,900 – All In
=$19,350 – Equity Capture

-$4,777 – Realtor & Title
=14,572 – Projected Profit

Cash Flow

Cashflow is the #1 reason we chose real estate because it is passive income. Equity is the goose and cash flow is the golden egg. Never touch the goose and grow your golden eggs to cover your monthly expenses.

Monthly Cash Flow

$750 – Rent
$412 – Expenses
$338/mo. – Cash Flow

I’m sure you all have more questions, so please… let ‘em rip!