Since this new investment property has taken up a large portion of our June and will continue to take much of our time, I’m going a different route with my monthly update. The property is one of the main things we’re focused on right now, so filling you in on the details seems fitting.
I have to be honest. Right now, this house is consuming a heap of my time (and my entire family’s time!). Which means I have very, very little time to blog. I’m doing my best to keep up, but if I have less of an online presence for the next 2 months, read on and you’ll know why! Once the house is finished, things will go back to normal at Centsibly Rich (and I’ll be able to network with my favorite bloggers again!)
Another truth. At this writing, it’s been 2 weeks since we bought the property and it’s been overwhelming. And a little scary. And a complete time suck. I don’t know what fantasy world I was living in that made me think I wouldn’t experience all of this, but it’s hit me hard and I’ve questioned this decision more than once over the last 2 weeks.
But, when I take a step back, I realize that’s why we did this. To let experience be our teacher. And, boy, have we ever learned some lessons! We already know so much about what we will and won’t do if we decide to do this again!
A house full
After our first closing was delayed due to the tenant not vacating the property, we finally closed on the house June 12. Though we weren’t shocked, the 
house still had a ton of “stuff” in it. We didn’t change the locks for the first two days to allow the tenant and the neighbors to come back and get what they wanted. But we were still left about 2 dumpsters worth of stuff to get rid of (and that’s not including the free stuff on the curb!). 
When we looked at the property, we knew we weren’t seeing the whole picture – because of 30+ years of stuff stored in the house. We were mentally prepared for surprises but I admit, on our first day, I questioned my sanity and wondered why we would ever want to take this on.
The place stunk (bad!) from a combination of dog urine, dog feces and the mouse droppings everywhere. With all that stuff in the house, we didn’t previously notice the prevalence of mouse poop (and the smell wasn’t as bad!?). We knew the dogs had done a number (actually #1 and #2) on the house, but it was worse than we thought (I think they went everywhere BUT the grass – in the house, on the deck, in the mulch!).
So day 1, we walked in, filled a couple of garbage bags, said screw it and went home, wondering why we got ourselves into this.
Day 2 rolled around, I dealt with the first issue (electric hadn’t been run to the new A/C unit) and we started cleaning out what we could. We felt a little better about it. Though we knew we had our work cut out for us, we still felt like the house would be a decent rental property. We also knew we would be putting a ton of time into getting it ready to rent.
Days 3 – present are a complete blur. The first 1 ½ weeks involved much time cleaning out and hauling. Once we got all the stuff and nasty carpet out, we could start our plan for renos.
I think I rework the budget every single day. Even though we knew we’d have to spend thousands to get the house up to par, the saver in me has a hard time with that aspect of it. And we could spend so much more than we have budgeted doing all the things that could be done. We’ve been working on a strategy for the best use of the budgeted money.
The numbers
Since this is a personal finance blog and all, you probably want to see some actual numbers here, right!? Here you go…
Purchase Price: $92k
Estimated cost of repairs: 25k
Total estimated cost: $117k
Estimated rent: $1200 (average is around $1230 for the size of house and area)
Amount financed: $69k at 4.5% (P&I: $350/month)
As an aside, the property is assessed by the county at $131,700. Houses in our area typically sell for over assessed value right now, when they are in good condition. Plus, the property is located in a desirable, central neighborhood in the metro area. With this information, we feel okay about putting the money into modest renovations.
Since we are doing some of the work ourselves, we’ll also have to make a payment or two and pay the electric and water bills as well, which will definitely cost us. But by allowing more time, we will be able to do more of the work ourselves and save on labor costs.
The reno
The original house was built in 1919 and was added onto – but we’re not sure exactly when. It is an old house, no doubt. But for being almost 100 years old, it’s structurally sound and has some charming characteristics (brick arched wall!).
Here’s the good things we (probably) won’t have issues with anytime soon: brand new HVAC, brand new roof, sewer line and water lines replaced approximately 3 years ago, new driveway 3 years ago.
At this time, the following is what’s on our list to work on:
Flooring. We thought we made a great discovery when we pulled up the nasty (NASTY) carpet and found hardwood flooring. And it is decent, but the time commitment involved in refinishing it isn’t worth it to us right now. So, we’re installing all new flooring.
Siding/stucco/stone. Before painting the outside, we will repair cracks in the stucco. We also discovered a spot in the front of the house that is rotting, so we will remove it, replace it with new wood, and install new siding over that portion of the front. (We hope to contract some of this work out)
Landscaping. We took out three trees in the front, and are cutting a ton of branches off large trees on the property. We took out a chain link fence, power washed the back deck. The front deck needs repaired before we wash it. Several hostas and lilies were scattered throughout the yard, so we relocated them around the house. We will have the huge stump out front taken out and will redo the front landscaping after we get the siding work done.
Walls. New drywall in most of the house. At this point, we’re getting bids. This is expensive!
Electrical. The house still has some of the old knob and tube wiring, so we will hire an electrician to get it up to code (this is expensive too!)
Kitchen. New everything. Well, some things will be used, but new to the house – thank goodness for Craigslist and the Restore. We are removing a wall, moving doorway and adding an island. (Most of this we will do ourselves)
Bathroom. New everything.
Basement. Install larger sump pump and clean it. Yuck. Maybe some paint too.
That’s just the major things. There are so many little things – like trim, paint, doors, etc.
Looking at that list exhausts me. But we’re really determined to stay within our budget, which is why we’re DIYing what we can.
I’m grateful it’s not just Alan and I working on the house – it’s the entire family! Our kids are paid to help and our parents volunteer a ton of time (especially my dad – thanks dad!). We will enlist the help of some neighbors and friends on occasion. And we will contract out some of the more technical, time consuming work.
Wow I got tired just reading that! Well it’s an exciting adventure that’s for sure! It always makes me wonder what people are willing to live with in their own home, ie, dog pee and poop smell. ugh! Good luck with the continued renovations and post lots of before and after pictures! I love those!
It’s too bad the tenant was living in those conditions (I could not). I only hope now that others know the situation, maybe they can get him some help with the dogs and cleaning. I need to take more pictures – I get so caught up in getting things done, I forget. Most of the befores will probably be on my phone, but it’s better than nothing! Thanks, Tonya! 🙂
Wow, a fixer-upper for sure. All great learning experiences, that I’m sure in a few months you’ll look back and laugh, but hard to see it when you in the middle of all this work. Good luck the numbers sure do look good.
Yes, it became apparent when we started looking for homes, with the market the way it is, we had to be willing to take on a property in need of TLC. You’re right – I will look back and laugh (and maybe even be glad we did it!?). When I do start focusing on the long list of things, it gets overwhelming, but I know it will all come together and work out. Thanks, Brian!
I think new sewer and water lines is a HUGE plus. Wow! With new electrical, it sounds like you might not have to worry about much for years to come. Water and sewer continue to be my biggest concerns about REI but it’s much easier to get to everything else in the house, albeit you might have to take out drywall once in a while. You got this!
There are a lot of good things about the house, actually. But it’s the bad things that we’re working on, so it’s easy to forget those good things. Thanks for the encouragement, Claudia! 🙂
Good luck with the rental! It sounds like you’ve made an incredible amount of progress in a short time. We did a 6-figure renovation on our current home and it was so stressful finding new problems pop up all the time (new floor joists, new walls, etc). It will all be worth it in the end!
Thank you! 🙂 We have made good progress, considering all the cleaning out we had to do in the beginning. I cannot imagine the stress that must go along with doing a 6 figure reno. Kudos to you for taking it on!
Looks like a ton of initial work, but based on the numbers will be worth it in the end. Good to have the entire family involved. A great lesson for the kids too.
Yes, it’s a ton of work. And I admit, I’m a bit impatient to see the final results (numbers and reno). It all takes time, though! You’re right – the kids have learned some great lessons – and skills – right along with us! 🙂
That is a bigger project than any I’ve taken on. I will be following along with the updates you provide and will be cheering you on from the sidelines! Seems a bit more difficult than HGTV would have you believe 🙂
Thanks, Matt! 🙂 Oh, you should never believe what you see on HGTV! Though it’s been a bit overwhelming in the beginning, it’s getting easier. We are starting to see the light at the end of the tunnel.
Wow, what a big new undertaking! I imagine you’ll look back on this busy time and be so glad you did it. We have talked about buying a place to fix up and rent, but it does sound overwhelming. And we wonder how much time we’d actually have to put into it. Right now with little kids, not much. Maybe later!
We completely remodeled our kitchen when we bought our house. And we replaced a portion of our exterior wall, siding, and deck after discovering lots of rotten, ant-eaten studs and deck wood. Both jobs were DIYed with the help of skilled family members.
Good luck!
Thank you! 🙂 I think you’re right, Kalie. Though it’s been more difficult than anticipated, we will be glad we did it. Honestly, even with teens that are helping us half the time, I struggle to balance the time commitment. I can’t imagine doing it with small children. I’m glad we didn’t do it any sooner.
Sounds like you’re gaining some great DIY skills at your own house! I don’t think we would have ever had the confidence to do this if we hadn’t tackled some big projects of our own first.
We’ve bought three foreclosures and an estate sale condo and they always tend to be like this – so I feel your pain! It is great that you’ve enlisted the family too! Such important lessons for the kids to learn – but practicing patience is key! We are feeling stressed right now too with our renovations but we just step back and breathe and remind ourselves that it takes time (and a lot of energy!) You can do it – and remember, this is a marathon and not a sprint! Great work!
Okay, so what we’re feeling is “normal”?! You’re right – it is important to take that step back and take time. I’ve noticed when we work a ton of hours several days in a row, we need a day off. Thanks for the encouragement, Vicki! 🙂 And I wish you the best on your renovations as well!
You and Alan will look back on these days and be glad you took the plunge. I can relate to it feeling overwhelming taking on big projects like these and feeling like your losing your sanity. Just keep reminding yourself that whatever you encounter you can handle or hire out. Just be safe!
That’s great you involve your kids in this too. There are lots of life lessons and DIY skills you can pass on. Who knows, maybe they will do this on their own someday.
My best advice, make lots of lists, prioritize they daily, then start checking things off. Good luck and let me know if you need help with anything.
Thank you, thank you, thank you, Ryan. I appreciate your comment and I know you can relate! So far, we’ve tackled all of the obstacles in one way or another.
The kids get more days off than we do, but they are great help! They are learning a ton – we’ll see if they ever decide to do it later in life. I do think the greatest reward will be when they see the end product – and knowing they helped make it what it is.
My lists. Oh, my lists! They change daily. And, yes, they get re-prioritized daily. Thank you on your offer to help – we’ll definitely let you know if/when we need more help! 🙂 Will you be at the next meet up? We plan to at this point.
Unless something comes up, I plan on being there too. I’m excited to hear all the stories of obstacles you and Alan have encountered so far. As the saying goes, just keep moving forward!
Great! We have stories! 🙂
So glad you’ve got a great team to get you through this! Sorry, it is so much work but like others have said, I bet it will be so worth it in the end. Remember to take care of yourself too, Amanda! Best of luck.
I do have a great team! 🙂 Thanks for the kind words, Amy. Self-care is definitely important right now!
I’m really interested to see how this turns out for you over the next year. I keep going back-and-forth on the idea of rental properties. So it will be great to see your experience unfold, starting from day one!
It will be just as interesting for me! Hope you can learn from our experience! 🙂
I want to do a rental property in the future. I love learning about other’s experiences, so I’m definitely going to be taking notes!
Thanks, Latoya! 🙂 Hopefully the updates help others trying to decide. I do have to say, at this point, it’s a huge time commitment.
Oh my – I am exhausted just reading this Amanda! I am sure it is incredibly overwhelming, but it will pay dividends in financial security and eventually passive income. Hang in there!
Thanks for the kind words, Linda! 🙂
Great post, I’ve been looking forward to read about your rental property as I’m very interested in real estate at the moment. I am not handy at all so I don’t think I could take on that project. The property I bought was out-of-state anyway so I couldn’t do anything even if I had handy skills…which I don’t. The property I bought needed some work and the realtor I worked with managed the project and dealt with the contractors.
It would be really nice to have someone else manage the project! And completely necessary when you do it from a distance. I’m acting as the general on this house, which is a totally new role for me. I spent my whole week last week getting estimates. It takes a ton of time, but it really helps you discern who you can trust to do the best work and prices vary on some projects (on one project we got bids that differed by $1600!).
Wow, that’s going to be a lot of work, but with all the help you’ll get through it. Heck, if I was in the neighbourhood, I’d come by and swing a hammer! : )
Just think of the memories you’re creating (mostly good, haha). Years down the road, you’ll have lots of stories to recall about the ‘first rental’ house. Looking forward to your updates!
Awww, thanks, MMM! 🙂 We actually are creating some memories we’ll look back on and laugh at. Like when my son was carrying the box of men’s undies out of the basement and the box broke, spilling the undies all over the floor. Unforgettable! 😉
I’m jealous! Jealous of your rental and jealous that you’re doing much of the renovation yourself. I grew up doing home remodeling and really miss that work sometimes. I think I’d really enjoy working on my own rental property. Rather than scaring me off you’ve got my mind racing about the possibilities.
Best of luck with all of this!
Jealous?! Interesting response, Ty! 🙂 But I do understand – this is one of the reasons we chose to take it on. We like to DIY. We’ve just never done a whole house at one time. I admit, the overwhelm is lessening. The cleaning out was the worst, demo wasn’t so fun. But now we get to put it back together. And it will be nice to be part of a great transformation.
And if you’re going through Iowa this summer, I can supply you with a home renovation fix! Thanks, Ty!
Oh, my heart goes out to you! That is just an exhausting list. I hope you give yourself some flex room on that budget. Even small renos rarely come in on budget, and this is enormous! It really sounds like a fabulous investment that you’ll be glad to have. In a year or two, you’ll thank your past-selves for all of the effort you’re putting in now. Stay strong. Build in some treats for yourselves if you can. You’ll come out the other side, and you have a big cheering section while you’re still in it knee deep (thigh deep?) – and I’m part of it : )
Oh, thanks so much, Ruth! You know, we knew (kinda) what we were getting into. But for some odd reason, that didn’t soften the initial shock. If we go a little over budget, we’ll still be fine, plus I tend to overestimate everything to allow a bit of a cushion. The overwhelm is starting to lessen and taking days off here and there helps tremendously. I am so grateful for the support here. It helps more than you know! Thank you! 🙂
The totality of the renovation is overwhelming! It’s great that you have help. Mr. Groovy’s done a lot of small jobs himself and at times I was his only helper, and not strong enough to lift whatever needed lifting.
The new roof and HVAC are a huge plus! Hang in there.
Thanks, Mrs. Groovy! 🙂 One day at a time. And yes, all the help we’ve gotten is amazingly helpful (I can’t lift everything that needs lifting either!). I’ll never be able to thank them enough!
Sounds exhausting but incredibly exciting as well! Excited to hear how things progress from here!
It is exciting when we take a day off and look at the big picture! 😉 I look forward to sharing the transformation.
Wow, that is definitely an undertaking! Good for you guys! As many of us do, I’ve considered real estate and I still want to take the plunge, but I fear an incredible time suck, and I admit, it’s making me procrastinate. I don’t know if I have that size of a project in me, but it’s fun to watch others succeed. Quite an accomplishment, and plenty of memories coming from this one.
Is this one of many in the long term plan?
Thanks, Ryan! 🙂 It has been quite a time suck. But, it is getting better since we’ve gotten the house cleaned out, demoed, and have a plan of action. We procrastinated for 3 1/2 years – and finally decided if we didn’t try it, we’d never know. And we definitely took on quite a property to learn on. We don’t have any definite plans for future purchases – though we thought at least 5 would be our target. That said, if you would have asked me 3 weeks ago if I’d do it again, I would have said “no way”. Now, things are getting better and it’s more of a “maybe…”. Time will tell. Thanks for the comment!
My brother has been going through the same thing. He picked up a couple homes on auction and has been spending all his free time cleaning trash, painting, and hiring contractors. We’ve helped him a few days but he’s taken on the bulk of the work himself. Just last Friday he closed on the first house and made $38k in profit.
There were times when I could sense he was feeling very stressed and frustrated. But he has also been learning from that stress and is a now stronger person for it. He’s currently looking for another flip.
New things are always scary, especially when they involve lots of cash. But once you get through the tough part and start seeing the place come together, you’ll feel a lot better. And if you decide to do it again, you won’t feel as overwhelmed as the first time.
Good luck finishing the flip, it’s gonna turn out great 🙂
Thanks, Mr. CK! I really appreciate you sharing your brother’s story with me. It’s so helpful to hear from people who’ve had first-hand experience with the same thing. And it’s nice to hear that your brother came out of it well – and is looking for another. 🙂
Really, the first two weeks were the worst (and that’s when I wrote the post!). Now that demo is 95% complete and we have most of the contractors lined up, I do feel better. And I am really looking forward to seeing it come together. Now I actually do think we will probably do it again (just don’t mention that to my kids or parents 😉 )
Thanks for the great comment and kind words, Mr. CK!
How exciting…and daunting! I love that the breakdown for the bathroom is “new everything”. Old houses need a lot of love but old houses with stinky tenants is another ballgame. Good for you for taking on the task. You will learn so much out of this process! It will either make you want to do it all over again or never ever buy another investment property again. 😉 Until it’s finished, look on the bright side. You are building a new home for someone while and creating awesome memories with your family in the process. I love a good reno!!