After the last the Passive Income update, several people has requested to see the numbers of my rental property. So I thought, I’d write up one. If you are interested to see what the property was looking like, feel free to check it out here.
Sumary about the property:
This is a park front, 1 block away from the river, and a bike trail that leads to the Botanical Garden, Downtown farmer market. Within 1 miles radius of grocery shopping. A few blocks from the city community swimming center. Within 2-3 miles radius of where my siblings are living. Basically, I hope to call this home. That was why I had it fully paid off. And all of the work that is done on the house has to be solid so that it can last for another 100 years or more. I’d like a solid renovation, not just cosmetic or aesthetic.
Here are some of the before and after pictures:
Study room before:
Study Room after.
- The ugly red carpet is out. A new vinyl/wood floor is in.
- The blue is out. A neutral white wall is in. We kept the trim because it has characters.
- New outlets is install and rerun. No hanging cables. Several truckloads of trash later.
Dinning Room/Kitchen
Before:
After:
- Remember the entry door to the kitchen? Well, now there is a bar and a window to open up the kitchen. You can wake up, go downstairs, go into the kitchen, get something, then sit at the bar to eat breakfast. Or sitting at the bar, talking to the people who’s cooking in the kitchen? LOL 🙂
- Notice the floor is refinished. Put on a shiny coat of stain, and here we are.
- You can’t see from the picture, but the kitchen is reconfigure to give more meaningful spaces.
Here is another view looking out from the kitchen bar:
I couldn’t find the most updated pictures, but you get the ideas.
**view from one of the bedroom window looking out to the tennis court. Upstairs bedroom windows, we can see the little pool.
By the numbers:
- The renovation is over the budget. Originally, I budget for $16.5K. It came in at $20K and counting. As I need new window and painting outside down the road.
- I bought the house for $55,001, but with paper work it came out to be $56,900.
- Insurance:My sister pays for hers for $500-600, since I don’t have multi-property in down, and no cars, I don’t have the discount benefit. And my house is twice as big. So, it’s $730/year or $60.84/mo
- Taxes: $2238/yr or $186.50/mo
- Management fee: $50/mo
- Surprise repairs or maintenance cost: $120/mo . This number can be added back to my net if I don’t use it for a year.
- Rental Income: $1200/mo
Monthly Income: $1200
- Monthly Expense: ($60.84 + $186.65+$50+$120): $417.49
- Monthly Net Profit: $782.51. This number can be change depending on house much taxes I can take.
- Yearly Net Profit before taxes: $9390.12.
- Taxes analysis: Depreciation over 27.5 years: $2800/year
- Amount subjected to taxes: $6590.12
- Withholding for taxes 15%: $988.52
- Yearly Net Profit After taxes: $8,402 or $700/mo. **I’ll probably use this number from this point forward**. That way, I don’t inflate my number too too much. Although, with dividend income, I didn’t consider taxes. We’ll see. After a full year.
- Upfront Cost: $77000
ROI: 10.91%. It’s not too shabby, but it’s not as good as my 4-plex.
Funny Numbers:
- The County Assessed the house at $93,500 for the taxes of $2238/year
- Zillow gives the price of $124,323
- Comps: $150K-$400K in the area, especially on the Park Front properties, which is where this property is located.
- My assessment: Priceless, hihihi.. I hope to call this house my home once I’m fully retired.
Please let me know what you think, and what’s missing. I’m not a professional investor. I do things sometimes seems or looks “impulsive” like buying the property sight unseen. But when I bought the property, I did have a lot of things into considerations.
Those done photos looks really nice. I wish I could give you more insight about the numbers but it seems that you mention all the figures. I rent so I do not have an intimate knowledge of all the taxes, depreciation, fees, etc. that should be included in a report like this. Thanks for breaking down some of the truths about being a homeowner.
Thank you. I’m surprised that you guys are still renting. I guess, different stroke for different folks. But the “rich” bloggers are all benefited from real estates.
Thats a very nice house, still cant believe it only costs about $100k to $150k. In my area, house like that cost about $3 million at least so thats 30x, pretty crazy thing.
Wow, Singapore’s weather is ideal year around. Who wouldn’t want to live there? Hihi and the whole country is small so land are so expensive. You buy the land, not the house, 🙂
First off, what’s wrong with a red carpet, we actually had that twice in our own house 😉 Even considering to do it again, gives a nice warm feeling when you are in the room.
However, for a rental I would also never keep that in. Smart move to replace with idiot proof, nice looking, flooring. Love the before and after pics, looks really good!!
Pretty impressive yields by the way, it does not include a maintenance allowances, correct (see you do include depreciation, might be roughly the same)? Due to the higher housing prices, we don’t get these beautiful yields, but we are ok with that. Cashflow is still king!
Thanks for the compliments!
Yes, I included the $120/mo in maintenance. We had new everything – hvac, fridge, new bathrooms, and vanities. I specific didn’t provide a garbage disposal and a dish washer, washer and dryer. So if those things broke, it’s on them. Anything I provide is new, so it’d be good for 10 years or so, I hope.
and tenants are supposed to remove snow and cut grass, remove leaves. But I’d still already deducted $120 and $50 off the $1200, together with taxes and insurance.
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There are several phenomenons/factors when it comes to pick house for rent:
1. Pick an area where you don’t mind living in. If it’s good enough for you, it’s good enough for them.
2. Revitalization neighborhood – the local government is offering money to pretty much everybody to fix the houses up. And the white people are moving back to the neighborhood. Together, they sort of raise up the schools around them. I’m checking to see if the tenant’s children GPA ‘s >3.5. I’d give them a discount that to back to the kid’s college saving.
3. There is a up and coming university. They have been there for over 100 years. But they have done a phenomenal job over the past 20 years to give more practical programs for job replacement such as nursing, dental hygienist, radiology tech, etc. and the university is about 7 blocks away.
4. Even though the house is cheap $30k, $40k, even $20k. People didn’t buy for some reason. Now they are in$60k, $70k some are half way through renovation, some are done, in several streets closely, or on the other side. **however. The rent for a 4beds, 2baths is still $1200. Super expensive compare to the house price.
My tenants are 2 income family. One is on retirement, and he’s also working at Walmart. She’s working for the school system. Between the 2 of them, their gross income is around $70-80k/year.
That phenomenon is happening all over the country – if you go to Dallas, Virginia tech area, or Shenandoah university or Baltimore near Hopkins hospital. One side is million dollar houses, the other is $10k half way to the stud that sort of thing.
5. Tenants aren’t picky. So, do it to the good enough, pass inspection are okay. When you live in the house, you can build more shelves, finish the basement that sort of things to drive up cost.
Cool, thanks for the reply Vivianne. Seems like you found a nice area to buy your rental unit. For these amounts of money, you can pretty much buy a parking space in this country 😉
I read somewhere, the price for parking is $80k that’s so obnoxious! Wealth in the SF, Vancouver, Nyc, Chicago, doc metro, st Monica, etc make no sense.
The rich are so filthy rich, and is poor working class are left behind. Thus, I’m not rushing to get enormous amount to wealth, I don’t mind retiree in a semi small Midwestern town. Travel in the winter, summer I’d live in the Midwest and travel by car to see America.
Sounds like we are on the same page. We are also considering the small town retirement if we can (combined with some travel obviously).
Thanks for the update and for sharing the before and after photos. The place looks great.