So this is probably going to be a long one. But it’s been a long time coming so I’m VERY excited about it!
I finally put my money where my mouth is and bought an investment property.
A little back story: I bought my first house, fixed it up and sold it. I didn’t make a ton of money but I LOVED the process and that check at closing made me cry so I’ve pretty much been drooling over fixer uppers ever since. We did the same with a little townhouse in Brooklyn Park two years ago now: bought it, lived in it for a year while fixing it up, sold it, little check at closing. I’ve had a lot of moving around and drama and getting settled to do so I haven’t been in a good place to do this again yet. But I’ve been working SUPER hard and putting every extra dollar I could towards my student loans and earlier this year I finally made my LAST payment. #suckitsalliemae.
I started shopping. I didn’t want to bite off more than I could chew so I was hoping for a townhouse or condo, although I did make an offer on a pretty giant single family (it’s probably good that one didn’t work out, in hindsight). I had a feeling that this was ‘the one’ when I walked it. I buzzed through it in about 10 mins, bc I was seeing a few that day and I wanted to get home before my daughter got dropped off. I got home, made a pretty ok offer (it was multiples) and around 10p that night it was accepted.
What did I just do?! hahah I had a little melt down. And I definitely didn’t sleep that night. My brain was spinning about how much this would cost, what I would do to it, if I could really do this, what’s the worst that can happen etc.
The next morning I drove over there to take some pics and measurements and see what I had gotten myself into. And actually, it wasn’t as bad as in my dreams. The problem was the furnace. These units do not have basements so the mechanicals of the home are all tucked in strange places: water heater in bedroom closet, water main under the stairs, furnace/AC combo unit OUTSIDE!
The old furnace was probably from 1974 when this thing was built and when I had it inspected, they found about an inch of rusty mold in the bottom of it. Having dealt with mold in a rental that we lived in a few years back, I knew this thing had to go. They said they could repair it for around $600 but honestly, this furnace/ac was so old that I would rather replace it so I don’t have to worry about taking care of in the middle of winter or in an emergency-type situation. I had 3 companies bid the job and they all came out between $6500 and $7500. I lined up the work to be done the day after closing.
Maybe I’m getting ahead of myself. I haven’t shown you the BEFORE’s yet!
Here is the main room before. Lucky for you, there is no smell-o-vision on the internet. It was stinky though. And about 200º in there.
Nothing completes the green carpet look like wall mirrors!
And here is the kitchen, not too terrible as far as counter space and storage, but room for improvement for sure!
Here is the main floor bathroom. Super dark and dingy, and as it turns out, pretty yucky behind that shower liner!
Main floor bedroom was a bit of a cave, but a good space with high ceilings!
The upstairs loft area is a super fun space, but again, just begging to be updated.
Here is the second bedroom, upstairs.
The second bedroom has a private powder bath, but it was very tight with this big vanity.
I closed on the townhouse on October 19. I bought it for 113,500. I put 15% down and I budgeted 15k and 4 weeks for renovations. I guessed I could rent it out for $1450/mo. For those of you seasoned investors, this isn’t a smoking deal, but based on my estimates, it was a deal I’m comfortable with.
Here’s my math:
- Appraised value at purchase: 120k
- Purchase price: 113,500
- Down payment: 22k
- Rehab: 15k
- Monthly cashflow after paying mortgage/HOA: $625 (I initially did my math at 1450/mo rents but actually have it rented for 1575, so $625 is my actual cashflow)
- After repaired value (guesstimate, there aren’t any good comps) 150-160k
- Cash-on-cash return: 7800 (annual cashflow after debt service) / 37,000 (actual cash investment) = 21% return on my cash! Which is exciting because my savings account is getting less than .01% and my Roth IRA is getting about 7% right now.
- Note: you are supposed to add a buffer for vacancy and capital expenditures (repairing sh*t that breaks) into your cash on cash return. Since EVERYTHING is new, I’m not building capital expenditures into my first year cash on cash return and since my tenant has signed a 12 mo lease (AND I’ve got a mile long list of other people who are interested in the property) I’m not calculating in vacancy either. I only feel comfortable excluding these because of this circumstance, so if you’re planning something similar make sure you consider these things. I am also self-managing w/ Cozy.co, more on that later.
I’m planning to refi in the spring, at which point I can hopefully pull some of my cash back out and buy another one =)
So. This math made me feel TOTALLY ok about temporarily draining my savings to do this project. And I had to keep coming back to it thought the process as I felt overwhelmed, worried, or stressed out. So math is your friend, my friends. Do your math =)
Back to the projects. As Chip Gaines would say, it was #DEMODAY!!!
One of my buyer clients at the time had a son who does drywall and ceiling texture. Since this place had a TON of popcorn that was falling off I hired him to scrape and retexture my ceilings before I ripped everything out. This way, he didn’t have to spend much time masking off, and I just rolled up all the popcorn in that nasty green carpet! See the aftermath of popcorn scraping here.
Here is my dumpster full of grossness. It took me about a week to do all of the demo, including pulling down some of the cabinets, ripping out carpet, tearing out the shower, taking down the giant mirrors, etc. I had intermittent help from my Aunty Dy (who is SUPER AWESOME!). Here is the post-demo vid!
Tearing it apart was really fun. Like REALLY fun. But not w/o it’s owies. I burned through two pairs of gloves just ripping up the carpet. I picked up the $20 ones the next time I was at menards and they made it through the rest of the project.
The worst part about tearing up carpet is not actually removing the gross carpet and getting covered in who knows how many years worth of other people’s skin and grossness dust. The worst part about tearing up carpet is the 8 million staples you have to pull out afterwards.
Each stair tread had no less than 200,000 staples in it…
But the staircase actually looks pretty sweet w/o the carpet. I was hoping for something a bit more finished underneath because I didn’t want to recarpet them, but I knew I could figure something out.
This looks like a silly little blister (from my knuckle rubbing inside my glove while pulling up each and every staple) but this dumb thing took TOO LONG to heal and everytime I bent my finger it cracked open and bled. Worst injury ever.
Here is what we found behind the plastic shower liner. Never have I ever pulled off a shower liner that didn’t have something gross like this behind it…
Some people might consider this artwork…mosaic shower tile hahaha. Not quite.
Hazel earned a little money throughout this project by helping me work. She did a lot of cleanup!
Here is what was behind the giant mirror wall. Dyana and I pulled these suckers off while Henry had a snooze on my back =)
If you’ve got giant mirrors that need taking down, you need leverage. Stick something behind there that you can slowly work bigger and bigger objects behind to pry them off. Chances are good they are only held on by an eff-ton of glue. On HGTV they usually just smash them, but I have a very superstitious husband who couldn’t stand to hang out w/ me for seven years if I smashed them so we figured out how to get them into the dumpster w/o breaking them. The dumpster guy now carries the burden of those broken mirrors 😉
Oh yea, here is my SHINY NEW furnace/AC unit that matches the neighbor’s. I also had the ducts cleaned and the dryer vent/shower vents cleaned.
And I had to clean the gutters too =)
Henry was sad to see this sink go bye bye.
Of course I forgot to turn the water off before disconnecting the plumbing so I made a little flood….Live and learn =) It all dried up pretty quickly but it was an eventful morning.
I ripped down all of that nasty moldy sheetrock. Then added new insulation, a moisture barrier and cement board.
Cement board seams need to be taped and mudded w/ thinset to prevent the water from getting behind and making grossness like we had previously. Sometimes babies get hungry when you are covered in mud and you’ve gotta feed the baby and mud at the same time =)
Then came the tile! I left the 4×4 on the walls of the bathrooms since it was in good shape. When it came time for grout, I just rerouted the old tile to match the new tile. Pro tip: when grout skimming over old grout (vs. removing it and starting again) use a thinner mix (add more water!)of grout than you do for regular grout work.
I painted the vanity black and the walls of the whole house are a warm white. It feels SO much brighter in here already to be rid of the dark brown wall color!
Believe it or not, I am just (and always) learning. And even though I’ve done like 4 showers now in my life, I still seem to do this wrong EVERY time! My dear husand, the experienced one, tells me they call it ‘rough in’ for a reason…So you are supposed to buy the fixtures BEFORE you put the tile on so you know how big of a hole to leave. Whoops. This is not the only place this has happened. Someday I’ll figure it out.
Here is the bathroom almost done.
I resurfaced the vanity top with an epoxy tub/tile resurfacing kit. I actually like the gold cultured marble that was there before but this definitely made it look fresh and new!
I made my niece scrub the bathroom for me =)
Meanwhile, in the rest of the house…
I taped off the banister and spray painted the railings.
I also spray painted all of the register covers and closet shelving brackets.
It is amazing how a little spray paint and A LOT of white paint can really make something look fresh and new, even if it isn’t! The whole house was painted a warm white, I believe it is creamed vanilla by Dutch Boy. I like their Refresh line because it covers in 1-2 coats everytime and it has baking soda in it so it helps get rid of the stink AND it’s VOC free so no nasty paint fumes to deal with.
The kitchen cabinets got primed and painted inside and out. I chose black for the lowers and a warm white for the uppers. Anyone who has painted cabinets knows this is a pretty big project. I ended up taking the doors home with me so I could work on the after the kiddos were in bed.
Countertops are laminate and a REALLY cool finish, vintage planked elm.
One of the things I’ve learned with this project is that working on stuff at your own house is very easy. You can work on it with the small amounts of time you have between other things like making dinner or getting kiddos ready to go. When the project requires you to drive 20 minutes, unpack the child(ren) work for a bit, then clean up and drive back 20 minutes, you get a lot less done. So my time budget of 4 weeks was a bit too ambitious.
Back to the kitchen. Rather than pulling the sheetrock down to get rid of the big glue spots from the mirrors, I went all Joanna Gaines on that wall and put up #shiplap.
My friend Kate came out to help me the first day, and I was glad to have the help! I think it looks AWESOME!
Pro tip: have a spare electrical box to trace around to make cutting the holes around outlets easier. I did not take this advice and it was a pain to re-do after the fact!
Here is the kitchen with the first coat of paint. Shiplap needed 2 coats.
The rest of the stuff was a series of smaller projects. The last big one was the flooring. I ordered plank vinyl from Home Depot. At about $1/sq ft this stuff is really affordable. Plus it’s easier to install than laminate and doesn’t require an expensive underlayment like laminate. I just had to use plastic underneath on the concrete floors. It is soft and comfortable, plus it has a lifetime residential warranty. You can cut it with a box cutter and a straight edge.
MAKE SURE YOU WEAR GLOVES SO YOU DO NOT CUT YOUR FINGER OFF!!
This is the plastic underlayment I needed for over the concrete. It is cheap =)
There is a bit of a learning curve to the install so I would recommend starting in a large open area, rather than the kitchen, like I did. Once you get it figured out you can really get it laid down quickly, but know that the more pieces you need to cut the slower you will move. Also, maybe I am just an old lady but this stuff REALLY killed my fingertips, (even w/ gloves!) joints (like knuckles and wrists!), not to mention the knees and back (I laid most of this down in a full squat w/ a sleeping baby on my back so I’m sure that didn’t help.
I budgeted one day to lay all 1200 sq ft of flooring. It took me 4. HA!
But it REALLY looks great!
Hazel checked on the twirl-ability factor and it scored very high =)
And Henry helped with the clean up =)
I left all the existing trim up and just used base shoe all the way around to finish the edges. I also thought the trim would only take me one day, but it in fact, took 4. Partly because I kept running out and every Menards in town seemed to be sold out when I would show up…
The stairs were a fairly big project too. My neighbor helped me rebuild the top step, which was a bit uneven and he also cut me some new risers for the lower section of the stairs. My measuring skills aren’t super awesome so it was VERY nice to have help with this!
New top step!
#Shiplap risers, cut perfectly!
The treads were stained dark (Ebony by Varathane) and I painted the risers white like the trim. They turned out GORGEOUS!
Henry and I painted a LOT of trim like this =)
I think that only leaves the BIG REVEAL!!!
And here are the PHOTOS!!
Here is the main space
It’s got a great open floorplan
And the kitchen!
All new appliances =)
And the main floor bathroom
It is really bright and lovely now =)
The main floor bedroom
Main floor bedroom from the other side.
The upstairs loft area
The second bedroom
The second bedroom from the other side
And the upstairs half bath, new sink, fresh paint, new mirror =)
My first tenant moves in this week! I listed it on Zillow, Craigslist and Cozy. Cozy is a REALLY cool service that allows you to syndicate listings for rent, take applications (including background checks and credit checks!) and collect rent and deposits all in one great location FOR FREE! Check it out.
So what did I learn?
- It is fun to spend lots of money. Rolling into menards, filling two cards, checking out, and having them fill your trunk, only to go back in and do it again = SO FUN!
- It is stressful to spend a lot of money when you’re getting to the end of the project. Even though I ended up on budget, I was over budget for a while until I got all of my returns done. Plus the time I took away from selling houses and hustling on the real estate front started to feel a bit stressful towards the end of this project.
- Everything takes longer than you think it will.
- This is hard work and takes more time than I’m willing to give another one. My house fell apart. We ate more scrambled eggs than any of us was happy about, and housework/laundry/cleaning etc was grossly neglected. I’m happy that I was able to involve my children and family in this, but I’m enjoying having some down time with them now.
- You will lose sleep. Whether it is to dreams of what the space will look like, or worrying about getting it all done on time/budget, plan for sleepless nights.
- Contractors can be your friend. I wanted to do this one myself so I could learn about it, but next time, there will be more contractors and I suppose I’ll be learning something new! Help is good!
- Lastly, I learned that this is easier and less scary than you think it is, and most certainly worth it. If you’ve ever considered investing in real estate, give me a call, shoot me a text, or send me an email. I’d love to chat about it with you and help you come up with a plan.
I’m on to my next big project soon! Stay tuned!!!
XOXO Friends! Thanks for all of your love, support, hugs, kisses, and referrals ;)!