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The purchase process is winding its way toward a conclusion for the fixer-upper townhouse that I am purchasing. I had the inspection done last Wednesday (naturally, I followed the inspector around so I could see the problems that he saw), the appraisal should have come in today, and we are closing Friday.
The good faith estimate from the mortgage company came in at around $650/month PITI. I plan to charge $775 for the base rent on the new townhouse. We put 20% down on the $105,000 sales price, and the seller cooperated by paying for part of the closing costs out of her proceeds at closing. (I’m going to discuss that in more detail in a future post.)
It’s a property that’s really worth a hoot because it has all the right things wrong with it. It needs paint, needs vinyl tiles replaced, needs wood putty in door holes, a few outlets are cracked, has some oil on the driveway, and it has a few leaky faucets. On the plus side, the A/C is only one year old and the roof is solid. And all the appliances work. It should take about week to get it in ship shape.
The best part about the deal is that my other unit, 3 doors down, rents like hotcakes. As soon as we put the For Rent sign up, we have people knocking on the door. I’ve been waiting for another one these units to open up at a decent price.
On another note,
There’s a good aritcle comparing oil vs. latex paints over at fliprent.com.
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Tags: closing on a house, fixer upper houses, good faith estimate, house inspection
Hi, love the blog. I see you plan on renting for just a little more than your PITI. been doing a lot of sleuthing and it doesn’t look like you have much in the way of money for ins, maintenance fees, maintenance, etc. YOu seem to understand what’s going on so I won’t assume you left it out. How do you manage such costs?
Serrow,
Thanks for the comment.
I do most of the maintenance work myself, so that helps hold down costs. The money that comes in from a rental, in this case it would be about $125 a month, I usually deposit the rent money in a bank account and let it build up for when I need to replace an appliance or some other major purchase.
The unvarnished truth is that rental properties are a long term investment. Most rental properties don’t bring in alot of money initially (at least mine don’t). But, as time marches on, you gradually raise the rent and after a few years the money you make becomes more substantial.