EREIG Investment Projectx Portfolio
Creekdale Project
Three bedroom, two bath, single living area, completely updated kitchen and master bath, 1725 square foot home in Northwest Enid
Property Status: Rented (3 year)
Property Monthly Rent: $1200
*Potential Monthly Rent: $1200
**Current Asset Value: $175,000
***Appreciation Potential: High (4% or greater per year)
Asset monthly net cash flow: $250 ($350)
This home is a higher-end rental. Home is well kept, smaller, less expense home than any others on same street. Strong appreciation potential up to $200K in the coming years, and very easily rented to young professionals and their families.
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Windmill Project (Sold 1 July 09)
Three bedroom, two bath, two living area, office, 1750 square foot home in Northwest Enid
Property Status: Rented (18 months and counting)
Property Monthly Rent: $900
*Potential Monthly Rent: $1000
**Current Asset Value: $140,000 (sold for 139K)
***Appreciation Potential: Very High (6% or greater per year)
Asset monthly net cash flow: $275 ($375)
This home initially purchased as a fixer upper, has been done up very nicely.
Summary:
Property rented for a positive cash flow of approx $300/mo for 27 months ($8100)
Repairs were minimal during this time frame (less than $2K)
Sold for $139K for a profit of $30K after closing costs
Income Tax savings for this property equated to about $2500 for the 27 months
Home was sold tax free (from capital gains) since we lived in it for two years out of the last five
Tax savings ($2500)+ Cash flow ($8100)+ Profit from sale ($30,000)- maintenance ($2,000)=
$38,600 total profit over 5 years... zero money down!!
Did I mention I bought this with 100% financing! So none of my own money was tied up in the home! Return on investment is almost infinite! Try that in the stock market!
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Creakdale "2" Project
Three bedroom, two bath, 1792 square foot home in Northwest Enid
Property Status: Three year lease option
Property Monthly Rent: $1300
*Potential Monthly Rent: $1300-1350
**Potential Asset Value: $179,900 ($100/per sqft)
***Appreciation Potential: High (4% or greater per year)
-July 2008- Estimate for the "Flip"
Property Purchase Price: $150,000
Other Concessions to Original Seller: $2000
Estimated Exterior Improvements: $2000 (New Exterior/Landscape)
Estimated Interior Improvements: $3000 (Kitchen/Masterbath/Interior paint)
Possible 3% "other" Realtor Commission: $5400 (may or may not be a cost)
Closing Costs: $600
Total Cost of Property: $163,000 ($157,000)
Potential Sale Price: $179,900
Possible Net Income: $16,900 to $24,300
Property is a well below market value requiring minimal fix-up repair work.
-August 2008- The Actual "Flip"
Property Purchase Price: $150,000
Other Concessions to Original Seller: $2000
Actual Exterior Improvements: $2800 (New Exterior/Landscape,(inspection repairs))
Actual Interior Improvements: $5700 (Kitchen/Masterbath/Interior paint/repairs)
**New stainless dishwasher and Fridge also later added: $1500
Closing Costs: $600 or less
Flip Lessons Learned
#1- Biggest lesson- it is easy to underestimate the cost of materials. This was the main reason for going over budget. Now that we have "seen" what materials cost, we will have a better ability to estimate materials beforehand. Don't be afraid to "spreadsheet" costs ahead of time. Beware- the little things do tend to add up!
#2- Space out major events by a couple days. This means don't line up open houses right with the last day work is supposed to be done on the property. Yes, time is money, but give yourself a couple of days in between say, work completion and the open house, and you will avoid the last minute rush, or contractor "sleepover" to have things done tomorrow.
Overall this flip was a very positive experience, even though we ended up doing a three year lease option. It will be a win-win on both sides. Looking forward to the next investment adventure, whether it be a "flip" or long term investment.
-Brian Colby, EREIG Founder and CEO.
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*Potenial rent implies that under current market condtions and timing, the property could rent for more than the current rent.
**Asset Value is determined by researching residential property comparables, using MLS data from the last three to six months.
***Appreciation Potential is determined as Low, Moderate, High,or Very High, depending on price, current market demand in that price range, and other factors associated with that individual property.