Most of you know we wrapped up and listed our first investment house right after Christmas. It seems high time I shared some of the process and experience, and most importantly BEFORE + AFTER photos!
- We bought the house for cash in 2014. It was a bank sale we purchased in a blind auction.
- There was no HVAC, electrical, or plumbing left in the house to salvage.
- The floor plan was hacked up and nonsensical.
- The second floor had never been finished, but the basement with 6 foot ceilings had been (smh).
- We had no idea what we were doing.
Stuff We Knew
- Mitch had carpentry and electrical skills that improved throughout the project.
- I had layout software and some knowledge of workable floor plans.
- Mitch had laid floor and done trim work previously.
- Mitch had some experience with cabinetry, counters, and sink installation.
Stuff We/He Had to Learn
- Managing Contractors
- Stair building
- Time Management
- Project Management
The Timeline + Delays
Mitch worked only on Saturdays for the first couple years. He took time off for our wedding in September, 2015. He took off the beginning of 2016 when we renovated our Worthington apartment, and in October when Phoenix was born. These delays totaled about 20 missed days over the course of about 4 months altogether. Crazy fact: a drug ring broke into the house when we were renovating our apartment and setup a dealing operation. One of the neighbors called the city on them and they were evacuated. Good neighbors! Mitch went down to part time hours at his day job in August, 2017 so he could spend 20-30 hours a week on the house until December 2017 in order to finish.
Purchase Price: $5400
Renovation Budget: $60,000
Appraised Value: $76,000
Market Rent: $800/mo.
Monthly Expenses: $200/mo.
Sweat Equity: $11,400
Here is a side-by-side of the original floor plan, and the plan I drew up that we mostly followed for the renovation. The laundry closet became a second master bedroom closet, and we relocated the laundry to the downstairs bathroom, cutting the den area by the stairs, because we ended up creating a landing upstairs. We also ended up relocating the stairs to the middle of the house in the dining room and created a kitchen pantry below them.
The Renovation Work
The foundation, roof, and siding were all salvageable, as well as the original exterior walls. The basement stairs and door are also original. Everything else had to be redone.
- Demolition and gutting - we hauled everything but the studs away for months.
- Clearing all the overgrowth on the property - it was a jungle
- Evacuating (ahem annihilating) the groundhog residents - there were 20-30 of them!
- Repairing the front porch - roof and door
- Designing the new floor plan - I'm proud to say this was all me!
- Framing - I also helped with this!
- Building a new stair - Mitch's uncle is a stair master, so he helped a ton with this.
- New electrical - Mitch rewired the whole house on his own. His youngest brother installed all the switches and outlets, and most of the lighting in the house.
- New plumbing - We had this done by contractors.
- New HVAC and furnace - We also hired this out.
- New insulation, drywall and paint - We had an awesome crew knock this out in a week!
- All new trim, doors, and windows - Mitch did all of this with his dad and brothers
- Installing kitchen and bathroom cabinets, sinks, and counters - Mitch did it all
- Flooring in kitchen, bath, hall, and back entry - Mitch again
- Hardware and mirrors - My dad and brother helped with this!
- New sump pump - Mitchell the hero
- Custom closet and pantry shelving - carpenter Mitch
- Showers and bathtub, toilet and tiling - Mitch, Mitch, Mitch
- New Appliances - Installed by Mitch
- New carpet - Installed by the professionals
- Soffit and gutters - Hired out
- New privacy fence - Mitch and his dad knocked it out of the park.
I've written more about this here. It was long. Too long. It was a very big project for first-timers, and there were many moments in the three years—as we got engaged, moved, became pregnant, and started hemorrhaging money—that we felt we had to cut our losses and quit. We prayed the thing would burn to the ground so the insurance money would cover our losses. We cried. I hated the short weekends with Mitch. I hated not knowing if it would ever be done. We worried constantly that we wouldn't be able to recoup the investment for years and years.
Ultimately, we were super pessimistic...and, thank God, wrong.
The property appraised for almost double what we thought it would. The house had 8 interested parties the first day it was listed, and we had our pick of tenants. It rented in less than a week for 25% more than we originally thought we'd be able to charge. We got lucky. We also worked really hard and learned a lot.
Throughout the process we kept a few things in mind to carry us through. We referred to the project as "Mitch's education in real estate." Plenty of people invest more than $60,000 in a bachelor's degree, and since this house needed EVERYTHING, Mitch learned EVERYTHING. It took about as much time and money as a degree, so we always kept that in mind. If the return on investment didn't come until much later in other properties, we were prepared to live with that. We also reminded each other constantly that we don't want a boring life of ease. We want challenge. We want to try things we're afraid of. We want to make mistakes. We don't need every risk to be a win, and we don't really want it to be either. It's a balance. Being overwhelmed, sleep-deprived, stressed, workaholics is no way to live. But being comfortable and bored is the opposite extreme. When it got tough, we tried to focus on the adventure of it. We tried to celebrate the bravery in each other, and always marvel at the milestones.
I couldn't be more proud of Mitch, or me for that matter. And I was proud of us all along. Now I'm just proud and feeling the relief of it being done.
A Few Final Thoughts
It is now March, and to be totally frank, we're still recovering in our personal finances from Mitch working part time for the end of last year. We made smart choices, and used an interest-free credit card to cover the difference in our living expenses. We're excited to have that sucker paid off this month. When that happens, the book of Roy will truly be complete. I share that info to be up-front about the financial burden a project like this can be. We were super lucky and are really grateful to have had family and banks back us for the investment money we needed for renovations, and it's so awesome to see the fruit of the investment already paying for itself and then some. However, we did have to make that personal investment when we cut our income in half for those last few months, and it did require planning and sacrifice, and it has taken a few extra months to recover. Mitch has been doing an extra project for my folks after hours to help pay that off even sooner. Again, a bit of sacrifice. Instead of just resting after he finished, he jumped right back into working extra to finish this thing strong. I share, just to be transparent about the costs involved.
Overall, we'd do it again. We will do it again. We've learned enough to make some smarter decisions next time that should result in a greater ROI and shorter timeframe. Mitch couldn't be more suited to adventures like these, and I'm so excited to be along for the ride.