If you can't grow, maximize what you have
Its amazing what a difference optimizing everything you have can make. For example, I had a duplex only half done all year long. The one tenant was basically making the mortgage payment, improvement payment, and covering the insurance and taxes. In essence, I was breaking even on that property.
Well I took out another small loan and renovated the other side for about 4k. That gave me an extra $475 a month! Now I'm finishing a laundry room which will get me another $20 a month from one tenant, which will put me to $495. Then I rented out some unused space in my office building for another $75 a month + part of the utilities, which if the utilities are $100, it will gain me $125 a month. Finally, I plan on upgrading another unit I have which will gain another $25 a month. So in just a few months I've gained 645 a month in passive income, with a 182 a month payment on the renovation budget, giving me a total net gain of 463 per month. Not bad for about 5 weeks of work (which I got paid to do out of my 4k budget).
Next on my list is to pay off some operating loans, a mortgage, and a credit card I have, which will give me another nice monthly increase. Remember, paying off debts is still an increase in positive cash flow, and is the safest investment you can make.
After I wipe out my debt I'll do it all over again, (buy more rental houses, go into debt, but increase my cash flow further), then fix up some houses, sell them and pay off the debt.
Our current flip project is going fantastic. Just six weeks into it, we've replaced the entire roof, I've got siding about done on two sides, I replaced all the plumbing, built a 46' deck, rebuilt many rotted rafters in the roof, painted all the exterior trim white, rebuilt the back porch, demo'd the bath room, put a new front door in. At my first major house renovation I barely had a toilet working after two months and a couple walls built. So I feel pretty good to have this place about 50% finished just six weeks into it.
But that is what happens when you buy right. This house was much better than the last one, for just a little more money. We'll have much less into it, and it will be worth much more. Gotta love that. If it doens't sell, we'll rent it for excellent cash flow, so its a win win situation the way I see it.
Well I took out another small loan and renovated the other side for about 4k. That gave me an extra $475 a month! Now I'm finishing a laundry room which will get me another $20 a month from one tenant, which will put me to $495. Then I rented out some unused space in my office building for another $75 a month + part of the utilities, which if the utilities are $100, it will gain me $125 a month. Finally, I plan on upgrading another unit I have which will gain another $25 a month. So in just a few months I've gained 645 a month in passive income, with a 182 a month payment on the renovation budget, giving me a total net gain of 463 per month. Not bad for about 5 weeks of work (which I got paid to do out of my 4k budget).
Next on my list is to pay off some operating loans, a mortgage, and a credit card I have, which will give me another nice monthly increase. Remember, paying off debts is still an increase in positive cash flow, and is the safest investment you can make.
After I wipe out my debt I'll do it all over again, (buy more rental houses, go into debt, but increase my cash flow further), then fix up some houses, sell them and pay off the debt.
Our current flip project is going fantastic. Just six weeks into it, we've replaced the entire roof, I've got siding about done on two sides, I replaced all the plumbing, built a 46' deck, rebuilt many rotted rafters in the roof, painted all the exterior trim white, rebuilt the back porch, demo'd the bath room, put a new front door in. At my first major house renovation I barely had a toilet working after two months and a couple walls built. So I feel pretty good to have this place about 50% finished just six weeks into it.
But that is what happens when you buy right. This house was much better than the last one, for just a little more money. We'll have much less into it, and it will be worth much more. Gotta love that. If it doens't sell, we'll rent it for excellent cash flow, so its a win win situation the way I see it.
posted by Joel Huenink at
12:53 AM
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