Last week was a pretty incredible week. Here’s the rundown:
- The Celebrating Financial Freedom blog celebrated its one year anniversary.
- I published my first book on Amazon.com titled “How to Budget: The Quick and Easy Guide to Making a Budget That Works”.
- I finally became a successful real estate investor!
I Sold a House!
The process took longer than I had hoped, but I count it as a success nonetheless. So in this final post about my investment house, I want to detail for you how much I made, lessons learned, whether or not it was worth all the effort, and if I will ever invest in real estate again.
How Much Did I Make?
If you recall from one of the first posts, I bought the house as a foreclosure from a bank for $43,418. After replacing windows, removing a crumbling outbuilding, painting, rehabbing the deck, and many other minor repairs, I ended up spending $14,175 on labor, materials, and carrying costs such as gas, electric, and water for a total cost of $57,593.
The selling price of the house was $75,000. After sales commissions, closing costs paid for the buyer, property taxes, etc. I received a check for $65,862 as my final take on the deal.
After all is said and done, my profit on this investment house ended up being $8,269 (which is $65,862- $57,593), for a 14.36% gain on my investment in just over 9 months time. Not bad if I do say so myself.
- When I bought the house, I estimated it would take about $10,000 to fix it up. But I knew if I was wrong I would still have plenty of wiggle room, even if I was off by thousands. Lesson Learned- Plan for the worst case scenario and overestimate how much it will take to fix the place up before you buy it.
- My largest rehab expense was for removal of the outbuilding ($2,500). Although you could argue that it enhanced the value of the property because the dangerous, decaying building was gone, overall it’s not an item that I feel enhanced my return significantly. I could have made a much larger return on investment if I had not had that expense. Lesson Learned- Be very wary of items that will produce little to no return on investment.
- I did some of the minor repair work myself. Even with the limited amount that I did, I felt that it took more time away from my family and my responsibilities around my own home than I wanted. My wife commented that at times she felt like a “house widow”. Lesson Learned- Spend less time doing work myself (even though I enjoy it) and hire professionals so that I don’t sacrifice too much family time.
Was It Worth It?
I knew going into my first real estate deal that it would be a learning experience. I was honest with myself going in by telling myself that I might not make any money and that unexpected things would happen. So I think I went into the deal with realistic expectations. The fact that I made a good profit with no major hang-ups only fires me up for the next deal.
I will definitely do this again!
In fact, I’m already searching for the next deal…