I’m at the half point of December, and it looks as if I’ll definitely be able to reach my goal of 18k for this month. I may even have a slight chance at 19k if I play my cards right. This is all thanks to the $1048 paycheck I got this morning from the bank job, the combination of my regular pay plus the vacation hours payback. This month has really been something so far.
As I look towards 2013 and potential property Charlies, I’m thinking about a change in strategy as far as the type of property I’ll buy first. Originally my plan was to buy the Beautiful Valley property, then take out a loan to get all the units rental ready and then rented out by September of 2013. That would leave me with a 6 unit property in a beautiful neighborhood that would net me a little over $2000 a month, but that’s before the monthly payment of the rehab loan comes in. I talked a lot about the Beautiful Valley property as well as taking pictures of it in a post I did in May called Potential Property Charlie #1. Once it’s all rented out, I would start saving from September of 2013 until near the end of 2014 and hopefully save enough to purchase a property (Delta) that would net me $3000 a month, most likely a property that would cost around 200k. This would mean that I would have to make about $3,300 for 15 months in order to make the 50k needed for a down-payment on a 200k property. There are a lot of variables in that scenario, too many to control. While I may still go this route, I’ve been thinking of another plan.
My second strategy would be to buy a 4 unit property in perfect condition in an excellent neighborhood, one with a finished or “could-be-finished” attic. I’ll make less money per month ($1400-$1600), but I could finally move out of the batcave. The basement of property Alpha is no way for a “sorta” human being to live, and I’m getting tired of living in a basement with no windows, ceiling, floors or walls. It’s all cement and dust and mold, and it’s starting to wear on my mind. Even though I'll be making less money, the property will be in good condition so I can start collecting rent immediately. That's over 7 extra months of saving money instead of fixing up the Beautiful Valley property, and that adds up to a lot of cash towards the down-payment of Delta, the 200k property. It also beats having to take out a rehab loan which would just be another expense to deal with as I race towards the finish line.
Not only that, but the Beautiful Valley property has been for sale ever since I came to Smalltown. It has a lot of potential but no one wants to buy it because it would cost around 20k-30k just to fix up the exterior of both buildings (new siding, new roof, fixing the parking area, etc.). I haven’t even seen the inside yet, but I can only imagine the work I’ll have to do judging by the type of tenants that are in there now (welfare mongrels). So maybe I could just wait until I retire to purchase the property and hope that no one buys it til then. With a much higher monthly income, I’ll be able to fix up the place and have it rented out in six months with no rehab loan needed.
So I have two strategies, and I’m not sure which one I’ll choose. It all depends on the types of properties that are available in January when I start property hunting. It also depends on what interior work needs to be done at the Beautiful Valley property. I’ve never been inside, so my estimates are really based on assumptions rather than fact. We’ll see what happens next month, but it’s good to know that I have a plan for whatever happens. Both strategies allow me to retire by the end of 2014, and that's the most important of all.
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