Optimizing Properties for maximum cash flow
One thing I like to do when I buy a property is to not only improve the appearance by adding new vinyl siding, repairing any issues, new paint, etc but now I'm into changing the floor plan to maximize the homes appeal and potential income. My first few projects I just overhauled the bathrooms so they were really nice. New tile, new toilets, complete paint job, improved lighting are typical standards, but now I'm into complete floor plan changes.
For example, bedrooms = money. Pure and simple, no matter how nice your one bedroom is, your rent potential will always be less than a two or three bedroom. After taking a closer look at my duplex, which has a huge dining room and a misplaced living room off to the side after walking into the dining room when you come in the front door, I figured I'd make that living room into a bedroom and delete the dining room and call it the "living room". Then upstairs has a very small space which is almost a poor excuse for the smallest bedroom ever, but there is attic space right behind it, so if I take down a wall and make a bed cubby hole, I think I can call this place a three bedroom, and then instead of getting 375 rent for it, I think I'll be able to get 495 a month instead! Not bad for 1 wall, and a door in a place I'll already be renovating. The first month of rent will probably cover the materials needed to convert it into a 3 bedroom.
Over the course of 30 years, that little addition will make me an extra 43,200. I just got the property for free, in essence. At some point I will add a two stall garage, allowing me to get another 75 per side, creating another 150 a month or 54,000 in 30 years. So with two simple changes, and probably only about 10,000 dollars total investment in improvements, I'll make nearly 100k of extra money. Thats quite a few nice extra vacations or a couple of kids through college.
For example, bedrooms = money. Pure and simple, no matter how nice your one bedroom is, your rent potential will always be less than a two or three bedroom. After taking a closer look at my duplex, which has a huge dining room and a misplaced living room off to the side after walking into the dining room when you come in the front door, I figured I'd make that living room into a bedroom and delete the dining room and call it the "living room". Then upstairs has a very small space which is almost a poor excuse for the smallest bedroom ever, but there is attic space right behind it, so if I take down a wall and make a bed cubby hole, I think I can call this place a three bedroom, and then instead of getting 375 rent for it, I think I'll be able to get 495 a month instead! Not bad for 1 wall, and a door in a place I'll already be renovating. The first month of rent will probably cover the materials needed to convert it into a 3 bedroom.
Over the course of 30 years, that little addition will make me an extra 43,200. I just got the property for free, in essence. At some point I will add a two stall garage, allowing me to get another 75 per side, creating another 150 a month or 54,000 in 30 years. So with two simple changes, and probably only about 10,000 dollars total investment in improvements, I'll make nearly 100k of extra money. Thats quite a few nice extra vacations or a couple of kids through college.
posted by Joel Huenink at
12:43 AM
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