• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Facebook
  • Instagram
  • Pinterest
  • YouTube

Beyond Just Numbers

A Journey to Financial Freedom

  • Hometo start
  • Shopin store
  • Aboutme
    • My Story
    • Contact Me
    • Privacy Policy
  • Readthe blog
  • Real Estateinvesting
    • Series: Getting Started in Real EstateA step-by-step series
    • Series: Here is the Dealdeal breakdown
  • PERSONALfinance
    • Financial Independence | Retire Early

in Real Estate Investing, Series: Here is the Deal - The Breakdown · November 23, 2021

Here is the Deal – The Cottage House Property Purchase Breakdown

We bought the Cottage house just a few days after Magnolia Fourplex. This was investment no.2 in Macon, Georgia. This property caught our attention because it was built in 2008 which is rare in Macon.

The listing price was $59,000. When we initially inquired about it, it was rented for $850. If we are going by the 1% rule of thumb, then this is a winner (850/59,000 = 1.3%). Unfortunately (or fortunately), the tenants skipped before we got it under contract. The tenants had destroyed the house, so we were able to get some items fixed and the price reduced to $55,000.

This house is a 3Bed/2Bath single family home centrally located in Macon near the Downtown area. I would say this is a C- neighborhood. There are a few abandoned houses around the area, but also several recently rehabbed/flipped houses.

In doing our research, we found out that there are a few development projects nearby, so our bet is that house appreciation in the area is likely to occur. Of course, this is just one of the many factors we considered when making this purchase.

The Financing

We bought this property cash using a $10,000 private loan from my dad at 5% and the remaining $45,000 came from the sale of our Florida Duplexes. We used our paychecks to fund the rehab.

Right after closing on the cash purchase, we started the process with bank to get financing using the Fannie Mae Delayed financing program. This program allows you to refinance the property without the 6- month holding period that most lenders have. I noticed that most lenders are not aware of this program, so we had to educate them on this.

We got a loan in the amount of $44,250 which is 75% of appraised value of $59,000.

Deal Analysis

Our analysis inputs were are follows:
Purchase Price: $55,000
Closing Costs: $7,000
Rehab: $10,000
Mortgage: $44,250

Total cash left in the deal: $27,750

Pure Cashflow: $196.0
Rent: $850
Property Taxes: $82/month ($984 annually)
Insurance: $50/month ($600 annually)
10% Vacancy Reserve: $85
10% Management Fee $85
10% Maintenance Reserve: $85
5% Capex Reserve: $42.5
Mortgage P&I : $224

Cash-on-cash: 8.5%

Notice above that the property appraised for $59,000 which is less than purchase price + repairs = $65,000. As you will read below, we had a few hiccups that brought the rehab cost up.

For some investors, this may not be a good deal, but this met our investment criteria and that’s what matters. This is why setting your OWN criteria is key.

The Rehab & Lessons Learned

While I love how cute this house looks, it’s been quite a pain. To begin with, this was the first Macon property that needed substantial repairs before renting it out. Macon is about 2 hours from our house so we asked our property management company to help us manage this project.

Our property manager had a handyman she worked with so we decided go with him. We quickly realized finding quality and reasonably priced labor in Macon was going to be a challenge. The quoted price was above our expectations, but we didn’t have the time or patience to find someone ourselves.

It was our first time using a property manager and it felt nice to be hands-off. The job was getting done while we were working! All we had to do was give instructions and pay. Well, is it always that simple?! Of course not. Using a property manager added a layer of communication. We were used to talking directly to the contractors and now we had to tell our PM and then she would communicate back and forth. That didn’t go too well. A lot of times, we are not 100% of what we want to do rehab-wise, so we bounce back ideas with the contractor. Well, when we tried doing this through our property manager, it didn’t workout so well.

Another issue we had was letting go of control. I am a control freak by nature, so it was difficult for me not to be the one managing the project, so of course, that frustrated my manager so we ran into a lot of inefficiencies and wasted material.

The property was turned quickly and our manager directed us to pay, so we were like, “This is awesome!”. Then, we go to the property to take pics and OMG. The paint was super patchy, several missed spots, the doors didn’t close, the tub wasn’t finished and a whole bunch of small items that we had requested. Luckily, our manager acknowledged that she made a mistake and should have checked before telling us to pay. She finished the job herself and I can appreciate that.

The unit was rented out pretty quickly and we thought it was over when we got a call from our manager that the house had a mice 🐭 issue and it was going to cost $1,900 to hire a exterminator to take care of it 😩. Fine, we took the hit. The treatment worked and tenants were happy. Yay!

Fast forward to September , tenants stopped paying rent and now we have to evict. F*mee!!

The Cottage house has yet to meet expectations, but we are in this game for the long-term so we are not as concerned. The monthly holding costs are low enough that the cash flow from the other properties is enough to cover for this.

We invest in C- and D class properties, so these issues are expected to arise specially at the beginning. The first year is always a heavy hit, but once they are up and running, things tend to settle down. For us, it’s a risk worth taking.

I’ll be sure to update next year

This post may contain affiliate links. I may get commissions for purchases made through links in this blog.

Previous Post: « Real Estate Investment Strategies: The BRRRR Method
Next Post: Here is the Deal – Thunderbird House Purchase Breakdown »

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Recent Posts

  • Here is the Deal – Buying Short-Term Rentals to Build Wealth
  • Time to Buy- How to Make a Winning Real Estate Offer
  • How to Fund Real Estate Investments – Part 3: Private Money
  • How to Fund Real Estate Investments – Part 2: Hard Money
  • Here is The Deal – Skyline Purchase Breakdown 

Categories

  • Budgeting Tips | Money Talk
  • Financial Independence | Retire Early
  • Money Mindset | Mental Health
  • Real Estate Investing
  • Series: Getting Started in Real Estate
  • Series: Here is the Deal – The Breakdown

Welcome!

Welcome!

Let's talk financial freedom via real estate investing.

  • Facebook
  • Instagram
  • Pinterest
  • YouTube

Subscribe

Never miss a thing! Subscribe now to get the latest news.

Starting a New Business?

Starting a New Business?

Buy the Book!

beyondjustnumbers

New Blog Post 🚨 In this week’s blog post I am New Blog Post 🚨 In this week’s blog post I am going over why we bought a short-term rental, our experience so far. Plus what we did prior, during and after purchasing our first short-term rental in March 2022, a Cabin in Blue Ridge, GA.

Check it out at www.beyondjustnumbers.com or link in bio @beyondjustnumbers
I can’t stress this enough. Some investors are l I can’t stress this enough. Some investors are looking to make money from day one, but that’s not always the case. It wasn’t for us and I’ve talked to a lot of rookie investors who have told me “Thank God I have my personal finance situation together.” 

This is just my opinion. Do you agree? Let me know in the comments!

Want to join a free community of like-minded individuals? Join our REI Coffee Chat Community where we talk real estate investing, personal finance and financial freedom, and much more! Link in bio @beyondjustnumbers

Want to learn more about investing in real estate? Read my blog www.beyondjustnumbers.com

#realestateinvesting #realestateinvestor #creativefinancing #investmentproperty #buyrealestate #firemovement #debtfreejourney #financialindependenceretireearly #rentalproperty #investinginproperty #personalfinanceblog #wealthbuilding #planforretirement #investorlife #livefree #airbnb #moneyisfreedom #enjoythejourney #reicommunity #realestateinvestments #shortermrentals #cashflow #realestate
I used to think that investing in real estate was I used to think that investing in real estate was for the rich. I became in love with real estate while working for a real estate investment company that owned hundreds of units. This was back in 2011 and I was 20 years old at the time. I had less than 5 years permanently living the US, so I had no idea about anything. I grew up in Colombia and the only talk of money we ever had was the lack of it. 

The investors I worked for were a wealthy family, so naturally, I thought… Real Estate requires wealth. I don’t have wealth. Therefore, I cannot invest. 

I figured… well shit, I need become wealthy so I can invest in real estate. Eventually, after educating myself I realized how wrong I had it. You can build wealth BY INVESTING in real estate.

Took me a couple of years to figure it all out. Hence, why I didn’t start investing until 2019. I wish I had figured out earlier, but it is what it is. In just 3 years of investing in real estate, I was able to accumulate more wealth than I ever thought possible. 

Just to give you an idea…Did you know you could invest in real estate with as little at 3.5% of the purchase price? For a $150,000, that’s only $5,750. Buy a duplex that needs a little bit of work, fix it up, rent one side and live in the other. This will reduce your monthly expenses significantly, save the money and do it all over again.*

Of course it’s not that simple, but it’s also not that difficult. There are some particular steps and considerations which is  why I recommend doing further reading on the subject. 

Book Recommendation:
✅“The House Hacking Strategy” by Craig Curelop and ✅“Investing in Real Estate with No (and Low) Money Down” by Brandon Turner. 

#realestate #realestateinvesting
🚨 New Blog Post! Continuing the “Getting Star 🚨 New Blog Post! Continuing the “Getting Started in Real Estate Series” 

You’ve found a property either on your own or through a realtor, you’ve run your numbers, you’ve got a lender and now you are ready to make an offer. What’s next?

In this post I want to discuss a few items:

✅Key components of a real estate contract
✅How do you make a compelling offer to ensure you get the property you want
✅The main contract contingencies and how they work
✅Communicating with your realtor

I also provide real examples of what we have done personally. 

Check it out at www.beyondjustnumbers.com

Let me know what you think!
If I listed all of the hats, I’d never end 😂. If I listed all of the hats, I’d never end 😂. Anyone else? Show me the multiple hats you wear and tag me. Let’s have fun with some reels.

Trying to get good at the real game like @investinginyourwealth. How did I do?
The fact that you are not where you want to be doe The fact that you are not where you want to be doesn’t mean you won’t get there. Greatness takes time. Focus on what you control.

And remember, it’s okay to pivot.

#mindset #realestate #firemovement #realestateinvesting #realestateinvestor #rentalpropertyinvestor #rentalproperty #cashflow #motivation #financialfreedom #financialindependence #financialindependenceretireearly
We see a lot of advice around hiring a real estate We see a lot of advice around hiring a real estate friendly CPA. However, when you look up  CPAs that specialize in real estate, they can be pricey.  However, that doesn’t mean that other CPAs or tax professionals aren’t good. They might not be particularly aware of certain items, but they can research and collaborate with theirs peers. Perhaps it may require you to do a little of work to compensate. Things you can do:
✅ listen to The Real Estate CPA podcast or join the Facebook group
✅follow social media accounts of the pricey Real Estate CPA and take notes of what they are saying
✅attend free educational events 
✅read BiggerPocket book on Real Estate taxes 
✅if you know anyone working with a really good Real Estate CPA firm, ask them what they are doing

Then use that to go your CPA or tax professional and be like “Hey, is this something we can do for me?” They’ll probably say, “Let me look into it”. 

If they are good, they are going to research it and/or ask their CPA peer group. (CPAs and tax preparers also have Facebook groups where they collaborate with each other).

Here is a piece of advice, if they tell you “No, we can’t use this loophole or no, you don’t qualify to use this strategy” —> Ask WHY and “How can I qualify in the future?.” This way you confirm they did their homework and aren’t just being lazy. Don’t just take no for an answer. You can then get a second opinion by asking a question in a forum or to your peers.

So don’t panic if you don’t have a real estate CPA or tax professional. 

Next video I’ll be answering the question… “Can I skip the tax professional altogether and do my own taxes?”

#realestate
Load More Follow on Instagram

Footer

Beyond Just Numbers

A Journey to Financial Freedom

Subscribe

Never miss a thing! Subscribe to the newsletter to keep up to date when posts are available.

  • Facebook
  • Instagram
  • Pinterest
  • YouTube
  • Home
  • Privacy Policy
  • My Story
  • Contact Me
  • Shop
  • Home

Copyright © 2023 · Beyond Just Numbers · Design by Studio Mommy