There is currently a running joke with some friends: I am good at acquiring properties, but bad at making money from them. Currently I have three properties: One near Denver Colorado and two in Knoxville Tennessee.
The one in Colorado I have had since 2008 and is my primary at the moment. Since I am out in Tennessee a lot due to the other two properties, I also have my parents living in my second bedroom there. I let them live there for free to try to bolster their retirement as they head in that direction over the next year or so. They also help out enormously by being there, not only do they keep the place clean, organized, and ready for when I am there, but keeping it occupied helps with my peace of mind. An empty house might attract vandals and thieves, but what happens if the heat breaks in the winter? Recently the fence started falling over and could have injured the kids next door, but they were there to let me know and put a temporary fix in place until I was back and able to fix it permanently. Obviously that property only costs me money like this, but it has seen substantial paper appreciation in the past 5 years.
The first property I bought in Knoxville I joke about referring to it as a structure more than a house. I have owned it for about 8 months now and intended to fix it up and rent it out, but it turns out it basically needs a new foundation or at least some substantial reinforcement to the existing foundation to keep it from falling in on itself. It is completely unlivable as it sits right now, I anticipate needing about $60k to fix the foundation and renovate the property. For that money I believe I can turn it into two rentals, a 2/1 upstairs and a 1/1 downstairs with separate entrances. It will make a great student rental being close to campus, along a major bus route, and on the edge of a gentrifying area. Overall, I believe it will bring in about $1000/month after all expenses and taxes once I fix it up, which will be a great ROI… even considering it will have sat empty for nearly two years by then. Obviously, sitting empty, with general landscape maintenance and
The second property in Knoxville is more recent, within the last two weeks, and in much better condition. Not only is it livable, but I sleep there. Granted, I sleep on a futon with a foam mattress pad on top and have borrowed sheets and comforter. This property I am trying a new tactic, get it generating revenue within the first two months of owning it. The plan, rent rooms out on Airbnb. But, first, I have to furnish the place, because who’s going to rent on Airbnb if you don’t have a living room, kitchen utensils, table to eat at, and of course, a bed and furniture in the bedroom. So, the last two weeks have caused a lot of cash to exit my bank accounts. I will ultimately be moving to this house as my permanent residence as well, so at least one bedroom is considered mine, but the house is also a mid-century modern, split level design that has not been updated since the 70s when it was built. There is work to be done and forced appreciation to be made. Look for a posting soon detailing the plans for this house and how I intend to juggle renovation and rentals, the split level design will play a key roll in not making renters feel like they are in the middle of a construction site while staying here.
I am two weeks into cleaning and preparing the house for renters, I have been attending some estate furniture auctions, scouring craigslist, and occasionally buying things brand new like the reclining rocking chair, dishes and kitchen utensils, and of course mattresses. So far I have gotten some great deals and it is keeping me well below my anticipated costs.
Regardless of all my plans, as my friends remind me… I am still at $0 in revenue.