To improve your economic security you should plant in your mind the idea you should never sell a house. Converting your home to a rental house can provide long-term rental income and economic security to you and your family.
Here are the final numbers on the rental property that I purchased.
Price: $106,000
Interest rate: 5.125%
Term: 30 years
Down payment: $21,200
Principal & Interest: $457.37
Taxes & Insurance: $128.87
Total monthly payment: $586.24
Estimated rent: $770
The townhouse is 1100 sq.ft., 2 beds & 2 baths, washer, dryer, carport, and small back yard. It has a great central location and should rent easily. I have another property nearby that is very easy to rent.
It needs some cleanup and repair work in the kitchen, fire alarms, blinds in the windows, new toilet sets, etc. There is nothing big that we have to do to it. With my wife and kids pitching in, we should have it ready to go by the end of the weekend.
Here are a few more photos of the kitchen, the living room, and the back yard.
Despite the debacle last month, my wife and I are back to beating the bushes looking for our next “dream” fixer-upper house. Our plan is to find another one that we can live in while we repair it. That has worked out pretty well on the one we are living in now.
Of course, if a great deal for a regular rental pops up, we’d probably grab that too.
Rains = Leaks
We got some heavy rain Saturday. I received a call from a tenant Saturday night. She reported three leaks in her house. I knew it was time to re-coat the roof last spring, but I thought it would hold out throught one more rainy season. I was wrong.
So, flat roofs being what they are, the roof has to be dry before it can be patched. And, there has to be no threat of rain, or the coating will just wash off again. Been there, done that.
There is a 30% chance of rain today, but for the rest of the week the forecast is 0%. Tomorrow ought to be a good day to take care of it.
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There are very few conversations that include the word “grout” in them. Grout is one of the most under utilized words, and unappreciated substances in the English language. Yet, where would tilers be without grout? And yes, where would all of us who have tiled floors or walls be without this cementy substance?
This weekend, in a never-ending effort to finish repairing our fixer-upper house so we can rent it out, the family undertook to tile the closet floor. This was one of several smaller do-it- yourself projects that remain to be done before we can call this house finished.
Here is how it went down.
Step 1.
Number 1 son expertly cuts tile for the floor (note ear plugs -not an MP3- for protection).
Number 1 son precisely mixes the mortar to the right “peanut buttery” consistency.
Number 2 son carefully transfers the mortar from the mixing bucket to the transfer bucket.
Number 2 son and I precisely apply mortar to back of tile. Number 2 son expresses amazement over incredible precision.
Angy relentlessly spreads the much-anticipated “grout” into the spaces between tiles.
A common problem encountered in older houses is the grout can look dirty. For the 1957 fixer upper house that my wife and I are presently working on, the tile grout in the master bathroom was dingy (see picture above). My plan since I bought the house was to remove the old grout and replace it with new grout.
However, last week before beginning the grout removal, I checked my copy of Home Depot’s book “Tiling 1-2-3“. The book suggested cleaning the grout to bring it back to its old glory.
So I purchased some Agua Mix Grout Deep Clean, and some White Tile Grout Coating for good measure.
First, I used my grout saw to lightly scrape off dark spots in the grout.
Then, I used the Grout Deep Clean, which to my surprise, actually did make the grout look cleaner. I let the liquid “dwell” on the grout for 5 minutes, I “agitated” it with a scrub brush, then I waited 2 hours for it to dry. But it still wasn’t as bright as I would have liked.
Next, I liberally applied the Tile Grout Coating to the grout.
The coating did a remarkably good job of coloring the grout to a strong color of white. I was very happy with the results. After the coating dried I applied grout sealer.
After all was done, the grout looked like this.
So, the lesson is, as long as the grout is not badly cracked, you’re better off cleaning and coating the old grout. It can save you a lot of time.
Here are the tools I used – small bucket, white grout, a trowel, and a small “mud” (or joint compound) spatula (not pictured)
I mixed up a small amount of grout. Add water to the powder until you have grout the consistency of peanut butter.
When I mix grout, I wear a mask or kerchief to cover my mouth and nose. The grout mix contains cement, so if you breath in the powder it can scar your lungs.
I apply the grout with the small spatula.
Afterwards, I clean up tools with water.
After the grout has cured for three days, I apply grout sealer.
There are two pretty good books on floors and tiling published by Home Depot, “Tiling 1-2-3” and “Flooring 1-2-3“. I recommend “Flooring 1-2-3”, if you just want to buy one book. It cover tiles about as well as the other book, and also addresses how toinstall several other types of flooring. I used it as a guide to install both laminate flooring, and vinyl flooring.
Our first tiling project was in a small bathroom, a good place to learn the process. But since then, my wife and I have worked our way up to doing large bedrooms. We feel comfortable tackling any tiling project now.
I was reminded of this again when we discovered that we had termites in one of our bedrooms. This is a fixer upper house that we are living in as we make repairs; soon to be a rental house. My son bumped his foot against the floor trim and found that there was no longer any wood trim there. All that was left was the the shell of the paint in the form of the trim. The wood had been completely eaten by termites.
Hiring a Pest Control Professional
I usually like to do all fix-up type repairs myself, but this is a case where I let the exterminators (no relation to the California governor) do the work. The first few companies I called would not give me a quote over the phone. The one company that gave me a “rough estimate” came in at a budget busting $1500 to $2,000 for a 1600 sq.ft. house. The job must be based on the square footage of the house, so it’s not rocket science to calculate the cost. It makes it impossible to compare companies if they all have to come to the house before they can give me an estimate! They think that after you invest the time to have them come over, you’ll just fall for their sales pitch, rather than spend any more time finding the best deal (and at the same time you’re concerned that your house is crumbling from the relentless termite onslaught).
So, I kept calling. After several more calls I connected with A-OK Termite and Pest Control and they really were “A-OK” because they gave me a bid of $650 without a house business. They did the job last Saturday.
Termite Living Habits
Yikes! Termites
Here in the desert southwest, we have subterranean termites, which I believe are the singlemost common type. They live in colonies deep within the ground, sometimes to depths of 25 feet. Termites work their way up through the soil from their nest and enter any wood they can. Termites can gain entrance by crawling up the sides of foundations, building mud shelter tubes to shield them from light, or they can go up hollow sections in block foundations or up cracks in the poured concrete foundations.
Every 48 hours or so termites must return to the soil to get moisture or they will die. The exterminator (again, no connection to Arnold) sets up a barrier of chemicals in the soil that the termites cannot pass through. They usually inject chlordane into the the soil every eighteen inches around the entire house. The same procedure can be done inside the house.
Even if only one part of the house is infested, the entire house must be termite-proofed or the termites will migrate to the untreated parts.
The time it takes termites to do serious damage varies from only a couple of years to 10 or more years. So, if you think you might have termites, don’t put off taking care of them too long. If it’s been 5 years since the last treatment it’s time to have the house inspected.
The house had a leaky cooler on the roof when we bought it. I repaired the roof with E-LAS-TEK rubberized roof coating (for flat roofs like we have in Tucson), but I had not repaired the ceiling until Sunday It had been stained by the water from the roof.
(The picture dates are wrong. I didn’t update the camera last time I changed batteries.)
I scraped the old paint away above the bathtub. I used joint compound (“mud”) to patch the spot. After the mud dried, I brushed on “Kilz” to cover the stains and to prevent any future leaks from the roof to stain the ceiling. Later, I will paint it again with the white latex paint we are using for the bathroom.
Another project I worked on Saturday was to continue painting the house roof overhang. It could easily have been 50 years since some sections of the overhang were painted, other sections never had paint. The wood absorbs the paint like a sponge. The wood is so old that, in places, a it has a hair-like covering. Before painting, I scape off the hair (I give it a shave) with one of my “mud” spatulas. You could probably use a wire brush too, but it comes off pretty easy with the spatula.
I started off using the cheap $1.00 “throw-away” brushes that you can buy at Home Depot. They didn’t hold the paint too well, so now I am using a more expensive brush which is working a little better. The paint spreads a little easier.
Most people wouldn’t notice whether or not the overhang was painted. However, we want this house to last a long time, so the paint goes on.
For that one, the “Planeta” house, we worked late into the evenings and we would take turns getting up early the next morning, to put a few hours in before going to work. One of us would stay home with the sleeping kids. Making the monthly mortgage payments and all the repair costs that we were racking up, gave us real motivation to finish and get a renter in there ASAP.
In the present situation, it works best for me when I set easy short-range goals. Right now my goal is simply to get up early & paint for one hour before I eat breakfast and get ready for work. On weekends I can do more, but just an hour a day keeps the ball rolling.
The secret in dealing with contractors is that it’s better to pay by the job instead of by the hour. If you pay by the hour, whoever you contract with can bleed you dry by working many more hours than anticipated. If you can get the contractor to set a fee before beginning the job, he absorbs the cost of working the extra hours instead of you.
This technique works well if you are hiring a non-professional, like high school students to paint outside trim work for you. However, it doesn’t always work so well if you are hiring a highly skilled electrician or plumber. Sometimes they’ll give you a set price, but mostly you pay them by the hour.
I have a highly skilled handy man I call in for jobs over my head, and I always pay him by the hour. He often will make repairs at my rental properties at odd hours and respond quickly to emergency situations. Without him, I’d almost have to quit may day job to keep up with repairs. When you have someone like that, you do whatever you have to, to hang on to them.
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FIX EM UP RENT EM OUT
Purchase FIX EM UP RENT EM OUT (paperback)Award-Winning Finalist in the Real Estate category of the National Best Books Awards, sponsored by USA Book NewsGreat information for anyone starting out in the fixer-upper business. The author has served his apprenticeship in the trenches.
-- Fixer Jay P. DeCima, Investor and AuthorTerry Sprouse has created a profitable rental business in his spare time. What sets him apart is he took action.-- Bob Zachmeier, Investor, Educator, Author With the wit of Will Rogers, this book provides simple guidelines for restoring homes, and sanity to our crazy lives. --M.D. Matlock, Ph.D., P.E., C.S.E.