Road Trippin’ and Rehabbin’: Part 1
Learn a key tip for final walkthroughs, what we look for when buying a rental, and our experience attempting to work on a property!
If you follow us on Instagram you know we spent some time last week in Colorado and Minnesota to start some new projects, and finish some old ones. It was a busy ten days but we’re excited with the direction things are going and more details on what all is going down! In order to make this a quick read, we’ll first share what we did in Colorado, including lessons learned while doing final walk throughs and working with contractors, and then we’ll give an update on the Minnesota projects in a future post.
We had two projects to check up on in Colorado. The first one was a renovation that was being completed and we had to do the final walkthrough/inspection. The other house was a newly acquired rental property we were closing on and preparing to be rented in the coming weeks.
A few months back we bought a duplex with our good friends and partners whom we’ve bought with before. The bottom unit was rented but the top unit was vacant and needed to be completely redone to bring it up to living standards. We essentially treated this as we would any other rehab project even though we would hold onto it as a rental as opposed to selling when the rehab is done.
We worked with a general contractor who oversaw the project to ensure that all the plumbing, electrical, and mechanicals were all done up to code and city permits would be approved. Even though we would always like projects to be done a little more quickly (is it really that unreasonable to want everything to be done overnight??) we are grateful to have knowledgeable and trustworthy people on our team to make these projects happen. We couldn’t do this without them. We were very happy with the way things turned out and we now have this unit on the market ready to be rented.
One take away, and lesson we were reminded to do in the future is to always have your scope of work printed out and on hand when doing the final walk through with your contractors. We had planned to do this but got behind on time so we just had an electronic version of the scope of work on the iPad and quickly glanced through the scope of work as we walked through the property. Going from room to room, everything looked great and we figured everything had been done. It wasn’t until we looked back through the finished pictures that we realized the bathroom didn’t even have a mirror up… oops! Although it’s minor, we already signed off with the contractor and had a little extra work on our hands to go put a mirror up on a tight timeline for the couple days we were in the city. If we were careful to mark off each item individually on the scope of work we wouldn’t have missed this, so you can bet we won’t forget to do this in the future!
Anyone see something missing?
New Rental Acquired:
One thing we love about the market in southern Colorado is that property prices lower than what you’ll find in most markets. We were able to find and acquire a 2 bedroom house for under $45,000. We will need to put about $5,000 into this which means we should be all in for about $50,000. When analyzing rentals we always look for the property to achieve the 1% rule, which means if the total cost of the property is $50,000, we should be able to rent it out for at least 1% of the acquisition costs, or $500 in this case. Lucky for us, we should be able to rent this out for around $800 which means we’ll not only be able to cover all the monthly expenses through the rental income, but we should be able to cash flow a decent amount as well. We struggle finding deals with these kind of numbers elsewhere which is why we keep going back to the land where Bryndee grew up in beautiful Pueblo, CO.
Our new home! Nothing glamorous, but not bad for $50,000!
We left this property knowing we broke one of our big “rules” and were reminded once again why we have our processes in place the way we do. If you remember a few blog posts back, we wrote about how we always hire contractors to do our work instead of doing it ourselves because it looks better, it’s often done more quickly, and it allows us to continue doing other things that will help us grow our business (like find new properties). Well…. We were going to be in Colorado a few extra days after closing on this house and figured we might as well save some money and do some of the minor work needing to be done ourselves, after all, a couple days worth of work couldn’t be too bad… right??
We started early Monday morning and were grateful that some of Bryndee’s family was willing to come help us out (they are great workers in case anyone wants to hire them-jk, I think they are retiring their hammers after our project too). We had the little boys on hand and went to work. I knew going in I wasn’t the most handy of men around so I looked at the list of things needing to be done and picked to install new smoke detectors first. How bad could smoke detectors be, right?? Well after spending 15 minutes not being able to drill into the ceiling right and breaking multiple sheetrock anchors (hey it was a very thick ceiling, okay?!), my mother in law came to rescue me. She gave me some heavy duty metal anchors she uses for her interior decorating business and she stayed with me until we got that thing in. I felt defeated, and just kept thinking “this is why we hire contractors.” And that was just the smoke detectors, imagine how my next two days went…
We weren’t able to get everything done that we were hoping to, and although I was questioning why we hadn’t just hired it out in the first place, I realize it was a good opportunity to really see what happens on a job site. We were working close by our contractor who was taking care of plumbing and electrical issues and we were able to understand a little bit better what contractors go through on a daily basis and how we can better support them in their roles as they work on our projects. I kind of felt like I was on undercover boss learning and seeing more of what happens behind the scenes and I feel like we have a better understanding of our contractors for the future. So even though we generally have the mindset of hiring the pros to do it right, it’s not a bad thing to get your hands dirty every now and then to see other sides of the business you wouldn’t normally see.
We are excited to keep these projects moving forward and are looking forward to having both the duplex and single family house rented soon. We’ll keep pushing along in Colorado, but the magic with renovating properties to sale seems to be happening in Minnesota. Stay tuned for our next post to get the details on the property we’ll be closing on this week and another possible project we have under contract and are currently in the inspection period. And of course, if you’re not following us on Facebook or Instagram (@ourflippingfamily), be sure to follow us there to get an insider's look as we work on these various projects.