This is part 2 of my original post in June about the duplex deal I had under contract. Read the original story here first!
Since my last post about the Duplex that was due to close on June 29th. It ended up closing on July 5th while I was out of town in New York City. It took longer to get the clear to close than expected and with my travel dates set for July 4th, I did a remote closing where a notary comes to you to sign the papers on July 3rd and the papers being mailed and arriving July 6th. It was nerve racking being at a distance, but I much preferred it than coming anywhere close to the sellers who had been acting very irrationally the days leading up to closing.
In the end, it all worked out and the tenant that I was set to inherit on the non-vacant side gave me notice that they would be moving out by the first of August. I was nervous at first that the place would be a wreck and how to get the other side rented as quickly as possible with the current tenant still living in the property. Luckily the previous tenant had been very clean and she spent time thoroughly cleaning the unit and she left a week and a half early!
While she was still in the property I advertised the listing and posted pictures of the other mirror image side to gain interest on realtor.com, apartments.com, Zillow, and Craigslist. I received at least a dozen inquiries and set up an open house for the second Sunday before the end of the month 3 or 4 of the people who had reached out about the property. She left that Friday and I spent Saturday cleaning, painting, mowing the lawn, and pressure washing the driveway and walkway to the front door as I prepared for the open house.
I had all of the potential renters come and see the unit at the same time and without realizing it created a competitive situation to rent the unit. At that open house, I had the prospective tenants fill out a hard copy application that I reviewed after the showing. I only had the top candidates fill out the online application that conducted a background and credit check for a $35 fee.
They were two college students at FGCU and they passed the background check. After which I got them over a lease the next day to sign and have their parents co-sign. By Wednesday I had the property rented and check for first month’s rent and a security deposit in hand 5 days before the start of August.
It was a lot simpler than I had expected and I had a makeshift system that I used that seemed to work well. Additionally, I was able to raise the rents from what the previous tenant had been paying $825 per month to $1,200 per month. That is a 45% increase just from increasing rents from below market rent to above market rent with just a little bit of cosmetic work, sweat, and market research.
My mortgage payment including PMI, taxes, and insurance is $1,178 a month. This means their entire rent covers the debt service on my loan. Additionally, I have a roommate that lives in the other side with me and he pays $300 a month. In total the property grosses $1,500 a month or potentially $18,000 a year if it stays fully rented at current rents. Granted this is unlikely and I still have maintenance, repairs, and capital expenditures to set aside capital towards. Essentially besides utilities, I am able to cover my cost of living and I have my tenants paying off my debt and building equity in my property.
This is far from a home run or even a double it is a nice start for my first income-producing property and I am happy with the results. Some of my key takeaways are that action is better than inaction. Doing your homework and taking small risks pays off. I almost didn’t list the property for rent at $1,200 for thinking it was too high – in hindsight, I may have been able to ask even more but felt it was fair market value and I knew numbers wise it would make sense for me.
Overall I am very pleased with the outcome and am already looking for the next opportunity to find another investment deal!
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