Last night, I was co-host on a Twitter Spaces about Real Estate Strategies, and I detailed our first short-term rental deal, which we also house hack (live in one unit and rent out the others). For those more visual among us, I wanted to include the numbers here as well: the purchase, the renovation, the refinance, and the short-term rental (STR) numbers.
I wrote in detail about how we came to find this property, so feel free to check out the background here: New Real Estate Adventure.
About the property:
3-bedroom, 2.5-bath main home built in 1901
520 square foot studio cottage
200 square foot efficiency cottage
Dilapidated mobile home (later replaced with travel trailer)
About the deal:
Time on market: over 6 months
Purchase price: $285,000 (first appraisal $245,000, second appraisal $300,000)
Closing costs: $15,000 (includes $5,000 in closing cost assistance and 2 closings – one for re-finance) – from savings
Down payment: 20% ($57,000) – from savings
Renovation: $180,000 (structure, kitchen, landscaping, floors, paint, full remodel of one cottage, light remodel second, multiple roofs) – from equity from primary home sold and cash flow from W2 jobs in 2020 and 2021
Cash used: about $250,000 less $100,000 taken back out during re-finance = $150,000
Current equity: $215,000
Total Revenue: $65,000
Larger Cottage: $33,000
Smaller Cottage: $27,000
Expenses: $50,000 (includes cleaning, utilities, state licenses, software, taxes, insurance, maintenance, lawn care, and exterminator)
This difference allows for our mortgage payment and utilities to be totally covered
As you can see, for $150,000 total cash into this deal, we have earned almost that much back in equity, and the property completely pays for itself. What you don’t see in the numbers is the confidence and knowledge gained through this process, which is empowering us to expand our real estate portfolio, moving us much closer to financial independence.