New Financial Route

Hello everyone,

I wrote about my first investment property a while ago, but those of you who have been reading my blog know that I purchased another one as well. I have not had the chance to work it yet, but I wanted to show you all the current state of the property and give you my perspective on the renovation.

A House With Good Bones…Or Not

From the photo of the front of the home, you can’t easily tell that this property needs a lot of work. But once you walk across the lopsided floors, it’s clear that renovating this house is going to involve more than just cosmetic work.

Of course, a bit of unevenness is very common in old homes, and often doesn’t mean that there are significant issues. Many houses tend to sag and bend over time, even if they are foundationally sound. Others, though, meet a different fate.

When I visited this property for the first time with my realtor, I knew the foundation was the biggest issue. The left wall of the foundation is bent inward, and a portion of it near the staircase falling out. The other walls of the foundation, while in not quite as bad of shape, are compromised as well and show evidence of water intrusion.

There is also a cracked floor joist that I found about a month and a half after closing. So there’s a lot of work to be done down here…

Kitchen

The kitchen in this house is outdated and in need of updating, as you could imagine. The countertop space in the kitchen is separated by a radiator and window, and have no outlets. The drop ceiling doesn’t help its look much either.

To the right of the kitchen is a conveniently-placed laundry room. I’m not sure if the washer and dryer work — they were left behind by the seller.

Bathroom

The bathroom could use some updating as well, especially the floors. Fortunately, it’s quite large. This room has a lot of potential. I personally really like the clawfoot tub. It’s definitely staying post-renovation :).

Bedrooms

All the bedrooms are decently sized. There are some cracks in the plaster, but those can be fixed easily. The house has 9-foot ceilings throughout which makes the bedrooms feel spacious as well.

Exterior

The siding is a pale yellow vinyl…so not the most attractive look. On the other hand, it isn’t in terrible condition. Painting rather than replacing the siding may be the best option.

The windows could also be replaced, but I figure that I could still use them.

What’s nice about this property is that it came with two lots — there’s a lot next to the house, and the lot where the house itself sits that’s oversized.

The Plan

The first issue that I need to tackle is the foundation — everything else comes after that. I figure that this will be the most expensive and extensive portion of the renovation.

After that, I’ll need to do some updates to the mechanics.

I terms of HVAC, this house has a functioning radiator system, but the problem is there is no ductwork which means no air conditioning. The two options I have in mind are to either install mini-split units throughout the house or remove the radiators and install ductwork with central heat and air.

The best plan of action for the kitchen would be to gut it from my point of view. The drop ceiling isn’t the best looking, and the the entire room needs to be rewired anyway due to lack of outlets. The current layout is also pretty non-functional.

The bathroom needs some work as well, but my plan here is just to add a GFCI outlet and replace lighting, flooring, and vanity. Like I mentioned before, the clawfoot tub is definitely staying in the bathroom!

And speaking of bathroom…did I mention that there’s only one in the house?? That definitely needs to change. I’d like to either add a master suite on the second floor or a half bathroom on the first floor.

In terms of the exterior, the railing on the front porch needs to be repaired or replaced. I want to add space for off-street parking. Building a garage would be too costly, but having at least a parking pad available would add a lot of value compared to no parking at all.

The rest of the renovation will consist of flooring and painting. I will likely paint the siding rather than replace it.

A New Adventure Awaits

Renovating this house is going to be a big project, but I’m confident on the return on investment given the desirability of the neighborhood. The after repair value is fairly high (~330k) based on the renovations I want to do.

The rental rate would be around $2000 a month, however.

Many would probably consider this property a better candidate for a flip rather than for a rental, but I feel comfortable enough with the future prospects of this neighborhood to keep it as a rental even if it may not offer the best cashflow after the refinance.

In any case, I’ll keep you all updated throughout the process. Thanks for reading!