Home > Rental Property > Rental Property Series: How Much Did It Cost?

Rental Property Series: How Much Did It Cost?

Kitchen Before

If you have been following this series, you know that we have been working like fiends to get our first rental property liveable for renters by October 1. If you’re new you might start by reading the previous posts.

Rental Property Series: Buying our First Rental Property

Rental Property Series: Renovating Our Rental Property

Rental Property Series: Overcoming Setbacks

Rental Property Series: Finding Hidden Treasures

If you don’t want to read all of those, you’re really missing out, but to summarize

  • We purchased this property on August 24, 2012 for $63,000, with 25% down.
  • We plan on spending $3000-$5000 on renovations.
  • We hope to be done and have a renter by October 1.
  • We are using a property management company and are asking $750/mo for rent

    Kitchen After

Well, October 1st has come and gone, and we are done. With a last gargantuan push this past week, we put the hardware back on the cabinets, cleaned up the construction mess, hung towel racks and a shower curtain, put in the counter tops and kitchen sink and faucet, got the stove and dishwasher hooked up, and painted the front porch. We also decided to put gravel in the front yard because the grass just would not grow. It shows poorly with a dirt patch in front of the house. The last of the electrical work was completed Monday after the electrician got sick last week. I didn’t want him installing electrical outlets in a fever induced haze, so I told him it was fine to come in this week. I’m now pretty sure no one will get electrocuted or catch fire, at least not due to faulty outlets anyway. I lost track of our hours, but hubby was around 20 this week, and I had about 8.

Now that everything is done, how did our expenses total up? Were we close to our estimated budget?

Bathroom Before

Expenses

Paint $300

Painting Labor $751

New Gas Stove $456.19

Install Gas Stove and Replace Dishwasher Line $83.72

3 New Window Panes with Install $182.09

Window Cleaning ( I tried, but had to get help)$75

Counter Tops $350

Gravel for Front Yard $165.12

WalMart, TruValue Hardware, and Home Depot $1339.11

Family Room

TJ Maxx $26.69

Electrical Work $1000

Total $4728.92

It came pretty close to our high end of the budget, but we didn’t go over. There were some things we could have cut out, like the new faucet or rock on the front yard, but we hope the small details will attract a good tenant.

As of now, we still don’t have a renter. I’m hopeful that this week we’ll get some good showings now that everything is done and in place.There is a couple coming back today for a second look. We are right on with comparables in the area, and ours is newly remodeled, so cross your fingers.  We have already paid our first mortgage payment of $292.34, electric bill of $28.30, and water and sewer bill of $63.96.

If you are considering purchasing rental property, it is important to include any renovation and carrying costs you might incur. We fully intend to get this place rented ASAP, but if we had worst case scenerio and had to carry it for a few months, it wouldn’t break the bank. If you can’t make the payment without getting a renter right away, you really should save a bit more before purchasing. There are just too many variables to make it a sure thing.  It’s been a ton of work, and right now, we are not ready to jump into another one, but give us a few months. Our goal of owning five rental propeties over the next ten years has begun.

What should we have done differently? Would you rent this place?

Bathroom After

 

 

 

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

49 comments

  1. Impressive work Kim! The kitchen is awesome. I am considering renovating my studio flat after my tenant of 10 years moved out but trying to sell as is first, the work is daunting!
    Pauline recently posted..Snowflaking my way through SeptemberMy Profile

    • It is daunting, but we really didn’t have to get anything new other than countertops and a fridge. The backsplash behind the stove was a piece of paneling that cost $20, but looks like tile work. There are tons of cheap things you can do that make kitchens look great. Most of our transformation came from cleaning and paint.

  2. I’m new to your blog Kim so this is the first post I’ve read through, I’m looking forward to reading through the whole project!

    It’ll hopefully give me some ideas of my own as my plan for the future is to renovate homes/ flats then rent them out. But as if only 19 I’ve not exactly got the funding just yet!

    Thanks for the help Kim!

    Michael
    Ferratum UK recently posted..Ensuring Continuity of Business Operations with Business Cash AdvanceMy Profile

  3. The kitchen, bathroom, and family room pics you posted all look amazing! The flooring in the family room looks really nice. In my opinion, you made an excellent investment. The additional cash flow will definitely make it worth all the work you put into it.

    One question I have – did you have to install GFCI outlets? If you did, how much did it cost?
    DC @ Young Adult Money recently posted..How We Saved Hundreds of Dollars on CoffeeMy Profile

    • Thankfully, the flooring was already there, we just had to clean it up a bit. The kitchen is the biggest transformation. I’d cook in there now.

      • Sorry to ask again, but did you have to install GFCI outlets? It sounds like you hired an electrician to do all the electrical work?
        DC @ Young Adult Money recently posted..How We Saved Hundreds of Dollars on CoffeeMy Profile

        • Ask all you want. We had the electrician install those in the bathroom and kitchen any where that might possibly come into contact with water. I would let a pro do that just for liability reasons. If a renter is dumb enough to electrocute themselves and tries to sue you, at least you have a licensed person who can say you did everything up to code.

  4. I think it looks nice! You guys did good.
    Michelle recently posted..Extra Income During the HolidaysMy Profile

  5. The pics look great! Awesome job on staying within your budget. I am sure as you go along with this you’ll learn different ways to help cut costs further on renovation expenses.
    John S @ Frugal Rules recently posted..How to Save Money and Not Spend $300K Raising a ChildMy Profile

  6. I think you did a great job! Love the new look!! Hope you find a renter soon :-)
    Tackling Our Debt recently posted..4 Fun Twitter Tools That Will Drive More Traffic to Your BlogMy Profile

  7. Smart decision before purchasing and renovating the rental is knowing if you can afford it in case you can’t rented. I think it’s “rentable.”
    Ornella@Moneylicious recently posted..How Organizing Can Help You Save MoneyMy Profile

    • We knew even if we never got a renter, we could still afford to carry it. I’m sure we’ll get one though. Rentals in this price range are really crappy in our area, so we should be in a good position.

  8. The project seemed pricey but then I saw those pictures. Wow. The floors look awesome. I thought they were new at first.
    Bill recently posted..How to Feel Rich Even if You are BrokeMy Profile

    • The electrical and painter were the big expenses. No way we could have done the electric work. We could have painted, but it would have taken forever and wouldn’t have looked as nice. If it had been summer, when my husband is off (he’s a teacher) we could have done it, but timing just wasn’t on our side.

  9. In short, yeah, I’d rent there. Looks good. I don’t see anythign wrong with it. Looks nicer than any place I rented when I was renting! Haha, good luck getting someone in there! :-)
    TB at BlueCollarWorkman recently posted..The Blue Collar View on StarbucksMy Profile

    • We rented a dump when were building our house. I had nasty carpet in the kitchen and bathrooms. There are very few newly remodeled rentals in that price range here. We are OK with pets too because there is no carpet, so hopefully it will go soon.

  10. Congratulations on both completing your renovations and the fine presentation of your progress and budget. Hope that you get a renter PDQ. I can tell you, if your property were in the NYC metro area, it would be snapped up in an “eyeblink” at $750 a month!

  11. The place looks great! Finges crossed that you find a renter soon.
    Hawaii Planner recently posted..September goal wrap up & setting goals for OctoberMy Profile

  12. Impressive job on the house. I think you’ll attract a renter quickly with the great looking place you’ve created. You’ve got to be fired up.
    AverageJoe recently posted..How to start planning for retirementMy Profile

    • I tired of being fired up and just want to relax and get someone in there to pay the bills. I am sort of proud. I know rentals are not supposed to be pretty, but I love that we took a dump and made it nice for someone to live in.

  13. Congrats! It looks fabulous – I especially love the tiny old school bathroom sink! And way to stay in budget, too!

    Assuming that the rents are in-line with the going rates, I have no doubts that you guys will find a renter before too long. You’ll have to let everyone know how you feel about using a property management company once you’ve been in it for a few months – and if there are any unexpected issues that arise after someone’s living in there… (we had a leaky shower that we didn’t know about until people started using it regularly!)

    We also noticed that we got a lot more interest in our units when we put a little TLC into the front yard – which after all the work that got put on the inside to get it “liveable” and pretty was so far down on the list… but it did make a big difference. Hopefully your rocks will go a long way to increasing the curb appeal for renters.

    Rest up… you’ll need the energy for your next one =)
    Mrs. Pop @ Planting Our Pennies recently posted..PoP Balance Sheet – September 2012My Profile

    • Thanks for the encouragement. It’s nice to hear good things from people who have been there before. I’ll certainly do updates when something comes up.

  14. Seriously impressive work there Kim! What an exciting side-project to have as well! When are you buying the next one?
    Savvy Scot recently posted..How to Save Money on Razor bladesMy Profile

  15. The kitchen and bath remodel look nice~~ way to go!!!
    Holly@ClubThrifty recently posted..Working as an Employee…and Making the Best of ItMy Profile

  16. Hi Kim!
    Congrats on the purchase. Looks like some great potential.
    Two questions. Did the 25% come from equity from other properties or cash? How much does a property management company charge? Is it monthly or flat annual fee?
    Eddie recently posted..Should You Have Separate Finances?My Profile

    • Eddie, it was all cash. We do have a HELOC on our primary house that would have been easy to use but it is tied up in another real estate venture that I will post about in the upcoming months. It’s a little more complicated. Our property management is 10% of the rent each month. That is kind of on the higher end, but this company goes in four times a year to check the heat, cooling, etc. Really just to see if the tenants are trashing the place, but it is to do maintenance as well. Thanks for checking in.

  17. Great work! I think it looks clean and beautiful great job on the renos. I’d be happy to get a brand new rental like this.
    Gillian @ Money After Graduation recently posted..A spouse is not an alternative income streamMy Profile

  18. You did a great job on fixing up your property.

    The kitchen cabinets look new. Did you buy new ones, or just put a new counter top on?
    Terry recently posted..What Riles Me Up – How to be a great radio show guestMy Profile

    • Cabinets are not new. We just cleaned them up an painted. I was even able to reuse the hardward and sink after many days of soaking and scrubbing. The counter tops, stove, and faucet are the only new things, and the backsplash is really a piece of paneling made for bathrooms. It looks like tile and only cost $20. Thanks for stopping by.

Leave a Reply

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

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

CommentLuv badge