September was a great month.
My business partner, Shauwn, and I closed on two rental houses and wholesaled three more; capturing over $42,000 in equity, $650 a month in cashflow, and $7,000 in wholesaling income.
I finished P90X, losing two inches off my waist and ten pounds; college football started after a long agonizing sports summer; and the smoldering Texas heat finally dropped by twenty degrees.
Equity Capture: $42,135
My favorite part of real estate investing is that it can increase your net worth by $20,000 or more almost overnight. Thatâ€
s because the equity you capture in each house is added on to your balance sheet.
In September, we bought two houses to hold; both fantastic deals in a great neighborhood. I donâ€t know how we got so lucky, but these two houses popped up at the same time within ten blocks of each other in a very desirable part of San Antonio.
The two houses added $42,135 to our equity capture, bringing us up to $98,946 over five properties for the year.
$14,572 Glendora
$22,939 Blue Lake
$19,300 Artemis
$21,155 Waxwood
$20,980 Rector
$98,946 Total
Cashflow: $660/mo.
These two houses added $660 to our monthly cashflow, bringing us to $1,688 a month in total cashflow for five properties.
$320 Rector
$340 Waxwood
$320 Blue Lake
$338 Glendora
$370 Artemis
$1,688 Total
Wholesale Income: $7,000
Wholesaling is when you get a contract on a property and assign the rights to another investor for a fee. Itâ€s a pretty amazing way to make money as you can see in this article I wrote about one of my first wholesale deals.
We were able to assign two contracts, the first one for $2,000 and the last was for $5,000.
$2,000 1st Assignment
$5,000 2nd Assignment
$7,000 Total
Waxwood
When I first walked into Waxwood, I knew it was a home run.
The average person would have been terrified by the tilted foundation, cracks in the walls and floors, and marks on every surface.
What scared away most kept the price down, and gave us an opportunity to restore a house to greatness.
3 Bedrooms
1 Bathroom
1057 Square Feet
I liked the neighborhood because it was on the high end of our “bread and butter†model: after-repair values in the $80k – $120k range. The rents were strong and houses didnâ€t stay on the market more than a couple of months.
We bought the house for $51,345 in a $100k+ neighborhood. After fixing the foundation, replacing the roof, refinishing the kitchens & bathrooms, painting the walls, replacing the fixtures, and refinishing the wood floors, we will have spent $20,000 on the rehab.
$ 51,345 Purchase Price
$ 20,000 Repairs
$ 2,000 Closing Costs
$ 73,345 ALL IN
It will be worth $105,000 after the repairs, which gives us an equity capture of $21,155 after discounting for the cost of sale if we sold it (realtor commission and closing costs).
$105,000 After Repair Value
$ 73,345 All In
$ 10,500 Cost of Sale
$ 21,155 Equity Capture
The cashflow is solid, as houses on the block are renting for $975 – $1050. We plan on putting it on the market for $950, sticking to our “best product, best price†model.
$ 950 Monthly Rent
$ 610 Monthly Expenses
$ 340 Cashflow
Rector
A week after we locked down Waxwood, a house popped up just 10 blocks away on Rector. Shauwn was the first to see this one and he thought it was an even better deal.
2 Bedrooms
2 Bathrooms
1402 Square Feet
We were getting it a little cheaper than Waxwood, so it gave us a little more room to breathe on the rehab. Once again, it was pretty scary on the inside to the average eye: Foundation was off, cracks in the walls, marks everywhere.
We bought it for $50,500 and once again, itâ€s in a $100k+ neighborhood. .
$ 50,500 Purchase Price
$ 23,000 Repairs
$ 2,000 Closing Costs
$ 75,500 ALL IN
It will be worth $107,200 after the repairs, which gives us an equity capture of $20,980 after discounting for the cost of sale if we sold it (realtor commission and closing costs).
$107,200 After Repair Value
$ 75,500 All In
$ 10,720 Cost of Sale
$ 20,980 Equity Capture
Itâ€s in the same neighborhood as Waxwood, so we plan on putting it on the market for $950.
$ 950 Monthly Rent
$ 630 Monthly Expenses
$ 320 Cashflow
Looking Forward
Since Shauwn and I started investing together at the beginning of this year, every month has been more successful than the last. Weâ€re ready to continue that tradition and make October an even better month.
