My First Rental Update
Ok, to quickly summarize my last post, I bought a rental property with a partner for $89K on Jan 31, 2003. It was a fixer-upper in an area where the comps were all over the board from 88k to 116k. We expected to receive $900 to $950 in rent with a monthly pmt of $650.
We started the repair mission instantly after closing. It was really quite comical actually, because my partner and I were not skilled in the art of household repairs. We started doing a great job of faking it for awhile. We quickly woke up and and hired some contractors for the major work (tiling and carpeting the floors, painting the outside, and tearing down old posters of Jack Tripper and Potsie Webber). But I will say we did repair the inside walls and painted it pretty well.
It's funny how quickly intentions can change. We have been working on the house for a little over two weeks. Sure we had little disagreements on how things should be done, but no real blow outs. Out of the blue, my partner asked me if I would be interested in being bought out for $5500.
How could I turn that down? There was still several repairs left- for example, the landscaping needed 18 tons of rock, the back fence was in disrepair and needed torn down, etc. I should also mention that he could never fully commit his time to the house due to his family situation.
I had to take it, I figure that was the fastest $5500 I ever made in my life. The deal was just made over the phone. I need to write something up for it now.
I tried to figure out his angle and I may have it. I believe when he refinances the house to get me off the mortgage, he will borrow on the equity. This money will be used to pay me off and give him extra cash on the side. The house is then his to rent out and obtain the future appreciation and cash flow.
I have to say that it was a fun ride and I am looking forward to many more journeys to come.
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