September was a really fantastic month for Passive Equity and our clients.
We closed on two rental houses; generating $1,975 a month in cashflow and $42,000 in equity for our business and our lender/partners.
We’ve been busy with rehabs and the results are really exciting.
Total Cashflow in 2010: $3,893 Per Month
Our cashflow on these two deals totals $1,975 which brings us up to $3,893 for the year, the majority of which goes to our private lenders in the form of interest payments. These interest payments provide passive cashflow on their investment in the deal.
$1000 Rector
$975 Waxwood
$800 Blue Lake
$700 Glendora
$418 Artemis
$3,893/mo. Total
Total Equity Captured in 2010: $98,946
One unique aspect of our program is that we share a portion of our equity with our clients in addition to the above interest payments.
We bought two houses in September; both fantastic deals in the same great neighborhood. I don’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 the equity we share with our clients, 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
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 didn’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
A portion of the equity capture will shared with our private lender upon the sale of this property.
The cashflow is solid, as houses on the block are renting for $975 – $1200. We plan on putting it on the market for $1,000, sticking to our “best product, best price” model.
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.
3 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, it’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
We leased this property before the rehab was done for $975/mo.
We’re ready for a new round of deals, hopefully to get started in the next few months!
