This Old House (Cheap Edition)

Well, it looks like the Foreclosure Project will be coming to an unexpectedly successful early end. It took a big push by all of us at the end of December, but the house has now officially become an income producer. And it is producing at $1200 per month versus the $1100 I originally estimated it would fetch!

But we’ll talk more about that aspect of the project in the near future – right now we still have to cover more details of the renovation that allowed such a nice success in the rental department.

As you know, this project involved a rather old house. Built in 1935, this place has seen the second half of the Great Depression and the golden age of steam trains in its lifetime. When you’re working on a house of that age, almost every project can open up a can of worms. Plumbing from this era involved plenty of cast iron and lead. Electricity was a relatively new invention, so wiring was crude and outlets and light fixtures were sparse. Insulation consisted of putting on an extra sweater and adding a log to the woodstove.

In an old house, you’ll also often encounter crooked walls, crumbling foundations, leaky and non-functional windows, and warped floors.  All of these things can be fixed, but each will tend to cost more to fix in an old house than they would cost to build from scratch in a new place.

So to profitably fix up an old house in anywhere but the most expensive cities (where the increase in property values might be enough to make any renovation worthwhile), you have to work with a careful sense of “know when to hold ‘em, know when to fold ‘em”.

We bought this particular house at just over $100,000 from a bank, and the current market value of a place of its size in good condition in this area is around $185,000. So we had some wiggle room, but not an infinite amount. And with the goal being a reliable and profitable rental house, we wanted every dollar spent to increase both rental value and eventual resale value enough to make it worth spending.

With those goals in mind, here are a few of the design and improvement ideas we did, along with some cost-saving tricks that helped improve the profit margin.

Floorplan changes:

Wider front door (acquired used for $20!), just after it was installed into new framing

It is messy and somewhat labor intensive to break down walls and rebuild them or frame new openings. But these drawbacks are often overpowered by fact that the materials required are dirt-cheap and you can totally transform a house by doing it. Most home buyers or renters make decisions emotionally, and they will perceive floorplan improvements as “flow”, “feng shui”, or even the “energy” of a home.  In my own lingo, what they are really seeing is “a large entry room with a view through to the back of the house”, “wide doorways”, “large windows and high ceilings”, and “plenty of natural materials like wood, stone, and tile rather than carpet and vinyl”.

In this house, we opened up the doorway between kitchen and living room to be about five feet wide and eight feet high, which allows people to see, converse and walk easily between both rooms – especially handy when hosting parties. I also added a wider front door, and rebuilt one doorway to the bathroom and added a second doorway on the other side, adding bathroom accessibility from both bedrooms, and also creating a “circle” in the house where you can get to any room from either direction. Kids love this feature for running around, and it’s comfortable for adults too, making getting around the house more natural and efficient since you can pick either of two directions.

Overall, we spent about 20 hours opening up these walls and installing the new trim and bathroom doors. Including materials, the cost would be just over $1000. At well under one percent of the final value of the house, it is a hugely profitable change to make, because it greatly broadens the potential customer base.

This is my friend about to jack up the house. Note the honeybadgerlike disregard for dirt and spiderwebs.

Structural Improvements:
This old house had some very crooked areas in the living room and kitchen floors. The doorway between kitchen and living room also had a sloped top with a big crack in the wall above it, reaching to the ceiling. Peeking into the crawlspace beneath these peaked areas, I found some old support columns supported by stones laid in the dirt. It became obvious that the house’s old stone perimeter foundation had settled due to moisture in the soil, while the dirt safely in the middle of the house had stayed dry and remained at the same height. This caused the support columns to effectively jack up the middle of the floors, creating waves.

To fix this, we crawled down into the dirt and used a hydraulic car jack to lift the floor structure off of the column, then remove the column. Then we released the car jack, which allowed the floor to settle back down to become level. The floor still retained some of its crown, so we left it unsupported for several weeks while we worked, to give it a chance to settle. At the end of December, it was fairly level so we reinstalled some new, shorter support columns to lock it into place and provide rigidity.

 A Bit of Luxury in the Bathroom and Kitchen:

I built this custom fully-tiled shower to add a feeling of substance to an otherwise small bathroom.

One of my theories of why I get better than average results as a landlord is this: I recognize the fact that Tenants Are People Too. Most landlords look for the cheapest crap they can find when preparing a rental house: plastic shower enclosures, laminate bathroom/kitchen countertops with the $29 shallow sink and plastic-handled faucet.. vinyl floors, old coil-burner electric range, and other trash. “Tenants don’t care”, they tell me.

I say they are wrong. Tenants are just like homeowners, looking for the nicest living environment they can find at a price they can afford. Often younger and accustomed to basic apartments, they are very pleased to encounter a rental house that shows some attention to detail. This helps you attract higher-income tenants who actually love your house – and who will thus take better care of it and be more likely to pay the rent.

These details cost very little to provide – during the renovation stage you can make  upgrades throughout the whole house at a cost equal to only 1-3 months worth of rental income. But they generally raise the rental income  so much that they are like getting a 20-100% annualized return on your investment.

The picture above shows the new shower. It was not overly expensive to make, and I used plenty of tiles left over from other projects. But by avoiding a plastic showerpan and pouring my own from concrete, as well as building in some shampoo nooks and bringing the tiles all the way to the ceiling, I tried to create a comfortable lair that just asks you to get naked.

This old sewing table, priced at $20, became the new vanity.

Another fun example of cheap luxury was in choosing the bathroom vanity. I originally budgeted $400 for a reasonable cabinet, sink, and faucet. But space was limited, so I was thinking I’d have to build my own to fit the floorplan. Just before building it, I got an email from my friend, who was at the used building materials store right at that moment: “Hey! I may have found the perfect vanity”. He snapped the picture at left on his phone and emailed it to me.

 

I was even able to make that lower shelf using scraps acquired from cutting down the table.

I was skeptical at first, since it was still six inches too deep to fit the space. But for the price, we decided we could risk cutting it down to size. That cool copper-toned sink and faucet were a matched pair bought from Overstock.com for about $200 including shipping. With some table saw and plumbing trickery on my part, and stain wizardry from the friend, the end product looked like this:

 

Paint Galore:

Before Paint

Old houses in poor condition usually have bad paint colors, with plenty of chips and stains in the finish. Ours had that, and it was also cursed with a bland white exterior. To complete the look, all exterior walls were completely plastered with hideous and unnecessary wiring and other barnacles: There was a Dish network antenna right on the street-visible South side. Plus TV, electric, telephone, and cable wires haphazardly spaghetti-ing around on every surface. With great pleasure, I ripped them all down before

After Paint - I also leveled the front porch and made some new wood support columns.

painting, rerouting only the cable TV and landline telephone wires that come from the telephone poles in the alley – these I attached to the hidden North side of the house so the services will still be available. But any new wiring to rooms will be done properly through the crawlspace, instead of stupidly on the outside of the house. A complete interior paint job was done as well, featuring bold natural tones with clean white semi-gloss trim to suit the traditional nature of the house.

Low Cost Niceness in the Kitchen:
Kitchen cabinets are expensive, often costing $10,000 for a medium-priced set in a medium-sized kitchen. That’s what you will pay if you special order Kraftmaid or similar brands from Home Depot or Lowe’s.  When pricing them out for a high-end new house, I even received quotes up to $20,000 for a similar level of quality from smaller local cabinet companies. Later I discovered a secret workaround to all this: buy your cabinets at Ikea, where they are just as nice as the other spots, but about half the price due to self-assembly.

But in a house of this price, we didn’t even want to spend five grand. Instead, we restored the existing base cabinets, and I used some eco-friendly blue stained (aka “beetle kill”) wood from local forests to build open-front shelving units instead of the old upper cabinets, and I also made some countertop units for the other side of the kitchen, where there were formerly just naked appliances sitting on the floor. We made it all blend together by creating tile countertops for both sides. I won’t pretend this is as nice as a new set of Ikea cabinets, but when you see it in person it adds great personality to this old rustic house, and is quite functional too – for about 80% lower cost even after paying myself for labor.

Before: Shitty appliances sitting in the middle of nowhere

After: Reasonable smooth-top range (craigslist) nestled between simple custom countertop units. You can also see the new paint and bigger doorway to living room.

 

 

 

 

 

We also replaced the appliances, scoring a fairly new matching set in black. There is a smooth-top range and a double door 23 cubic foot fridge. These suckers are worth about $1600 combined new, but thanks to Craigslist we scooped them for $400.

The new kitchen also features a really deep basin cast iron sink that I salvaged from another customer’s kitchen renovation several years ago (value about $240), and a tall arched pull-out/spray faucet in dark bronze finish ($160 new).  The sink is white, which contrasts nicely with the brown sand tone of the tile countertop, and the dark metal of the faucet.

A sink/faucet combo like this is rarely found in a house of this price range, but that is deliberate: it’s a prominent centerpiece in the new kitchen, and people tend to walk straight over and touch it. The quality from that area seems to flow to the rest of the room, convincing you that the whole kitchen is stylish and fancy, when in fact it is was extremely cheap to build.

There are many more examples of these low-cost upgrades we were able to score, but unfortunately the house rented so quickly that I haven’t even had time to take nice pictures of the finished work (the pics in this article are just quick iPhone ones). But when you think about it, that’s really the point of all of this: create a new house out of an old one, cheaply, and impress your potential customers so much that the first one to walk in, rents it at full price.

It really is so much fun. Do you see why I can never quit this job?

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64 Responses to “This Old House (Cheap Edition)”

  1. Joe O. January 4, 2012 at 6:45 am #

    Well done, MMM. Looks great.

    Can’t wait to see the numbers (materials cost, time spent, etc etc.)

  2. Jeh January 4, 2012 at 7:31 am #

    Wow, impressive turnaround. I wish I had the skills to do such immaculate work and for so cheap. I’m cultivating them slowly in our newly purchased home, but I’ve still got a long way to go!

    I loved the re-purposed bathroom sink…beautiful. And I’ve long been a fan of beetle-kill wood, it has such a beautiful look to it. I think the kitchen has a much better look than it would if you were to have used the typical Home Depot cabinets, or even some from Ikea.

    Kudos!

  3. Chris January 4, 2012 at 7:50 am #

    Nice work MMM. Take some more pics if you get a chance. I would like to see the finished product and the numbers for the project. Congrats on completing it!

  4. Heather January 4, 2012 at 8:22 am #

    I love the way you easily make decisions that are too scary for most other people. You just rebelled in a huge way by not installing a standard set of kitchen cupboards. Then, being confident about what you personally valued, you put in super cool and beautiful fixtures, and structural modifications that were not functionally ‘necessary’, yet you knew they were good.

    • MMM January 4, 2012 at 8:59 pm #

      Thanks very much – this means a lot coming from my big sister :-)

      Hey, maybe we should rebel by not putting standard expensive cabinets in YOUR eventual new house too? Slice, there goes about $10,000 from the budget, and it would go well with the rustic country/forest feeling of the place anyway.

      • Heather January 5, 2012 at 7:42 am #

        Open front cabinets might be best for ‘neat’ people. :-)

        • Geek January 5, 2012 at 12:28 pm #

          I dream about glass-front cabinets. *dreamy sigh*. MMM’s are adorably rustic/craftsman-y though.

  5. Matt B January 4, 2012 at 8:40 am #

    That looks incredibly well done, congrats. I just bought my first house like working with my hands, so I’m really enjoying the the reno articles and getting a lot of ideas out of them. How big is the house? It looks small, but that might be a good thing – a larger house would probably contain more surprises and increase the reno costs, no?

    How well insulated is the house?
    Did you throw in additional insulation?
    Are the walls drywall?
    How did you handle the electric upgrades (if any)?

    Great blog! I’m not hardcore mustachian but a lot of what you recommend is applicable to those of us who want to find a lifestyle somewhere between extreme frugality and exorbitance (leaning toward the former as much as possible, of course). Great arguments, great perspective.

    • MMM January 4, 2012 at 8:56 pm #

      The house is 800-odd square feet plus a small storage basement w/furnace and a nice big detached garage.
      - The insulation is currently poor, although at least the attic is insulated. Improving this is a future project.
      - Original walls are made from plaster and lath rather than drywall.
      - Electric: there was already a modern breaker panel, so I was able to just add some new circuits from that for new outlets, etc. But overall, not too much electric work was needed other than changing lights/plugs/fixtures.

  6. Naomi January 4, 2012 at 9:09 am #

    Wow wow wow wow. Totally awesome.

  7. Matt January 4, 2012 at 9:36 am #

    Awesome work, MMM. It looks like you have done some extensive learning for the the skills necessary to do this type of renovation — electrical, plumbing, woodworking, etc.

    Did you happen to acquire any of that knowledge through reading books? In other words, would doing some research at the library on those various topics and then starting small projects in my own home be sufficient to start down this path?

    • MMM January 4, 2012 at 8:51 pm #

      Yes! Construction books are great. I think reading them qualifies you quite well to get started on home projects. That, and a few tools. Maybe I should write an article someday on what comprises a frugal yet good quality carpenter’s toolset. For example, don’t buy the $1000 Dewalt cordless power tool set that I have unless it’s your main job – the largest Porter Cable combo set at Lowe’s is quite good at about a third the price. Stuff like that.

      • MStephens January 5, 2012 at 7:19 am #

        YES- Please write this article! I am very interested in home improvement- this article was fantastic- but I always get stumped on how to add/build my collection of tools. What is really necessary and what can I do without? When does it make sense to buy an old tool (estate auctions are great for finding quality hand tools) and when to buy new?

        • MiniMMM January 5, 2012 at 10:43 am #

          I second MStephens’ request, I bought the 18V Dewalt Cordless Drill for $100 new at Home Depot. Beyond that I’ve had trouble committing to any other power tools, since I have no idea what I’ll need/use. Been doing some basic wood-working arts and crafts style projects as I’m still in a rental, but looking to buy my own place/rental unit this year.

          • JMAN January 6, 2012 at 10:03 am #

            The beauty of “good” tools is the interchangability of batteries and other tools from the same manufacturer. The 18v Dewalt and Ryobi are both good choices as their batteries work with the other 18v tools. The batteries are pricey but the tools themselves are usually very cheap on Craigslist. You still may be able to get an after holiday deal on a battery which will work in a line of tools available in the $10 – $50 range. If you learn to use the tools, that skill will pay dividends throughout your entire life and build your mustachian muscles.

      • poko January 5, 2012 at 9:48 pm #

        Thanks for the construction book suggestion! I just checked out a ton of books about built-in shelves from the library, and they are much more helpful than anything I could find online. Pretty excited to start planning and building now :)

  8. Kevin M January 4, 2012 at 9:42 am #

    Looks great MMM. Can’t wait to hear the numbers side of it as well as see more pictures.

  9. PKamp3 January 4, 2012 at 9:55 am #

    Any more inspiration on the shower you tiled? I have a shower in my house which currently has a plastic base – my wife says it’s like an RV bathroom (that section of the master bathroom has a pocket door, so it really is a small enclosed space).

    I’ve never done the slope for a shower before – any hints? I’m still a few months away but I’m gathering courage now.

  10. El Beardo Numero Uno January 4, 2012 at 10:08 am #

    Kickass work! Very impressive craftsmanship.

  11. Jared Chmielecki January 4, 2012 at 10:55 am #

    I am impressed you managed to reference getting naked and honeybadger dont give a .. in the same blog post. Good job !

    • MMM January 4, 2012 at 8:46 pm #

      “shit” … it’s “Honeybadger don’t give a shit” – it’s ok, swearing is encouraged here.

  12. BrookeJ January 4, 2012 at 11:21 am #

    Looks beautiful! Love that dark brown paint in the kitchen. Sad there aren’t more pictures though. I’m sure you got some fantastic renters with the place looking like it does now!

  13. Eric DZ January 4, 2012 at 11:25 am #

    Very impressive! I’m not a hardcore mustachian, but reading your blogs really helps me save money, because I think of it as a sort of coup to avoid additional purchases of things that I don’t really need.

    I am doing construction work with Habitat for Humanity now, have my first build day on this Saturday. I thought that would be a good way to learn some hands-on construction skills, since I have an office 9-5.

    The house looks really good, the finishes are unique and impressive.

    • MMM January 4, 2012 at 8:45 pm #

      That’s a great idea – I’d recommend Habitat for Humanity volunteering for anyone who wants some free carpentry education while helping out at the same time. The ultimate way to learn is to work alongside someone who is already experienced – if you search your group of friends, you might know someone already. Volunteer to help them with one of their own projects for free if you like – they will probably accept.

  14. Marcia @Frugal Healthy Simple January 4, 2012 at 11:28 am #

    It *IS* so much fun. You should totally ask the tenants to take pictures and email them to you so that we can see the finished product.

    Our house was built in 1947. Our kitchen was galley-style. One side (with window) had lower cabinets, a sink, and two sets of upper cabinets.

    The other side was empty. There was no stove or fridge. Originally, there was a pantry/closet. And I expect the stove and the fridge were right next to each other on the wall. I don’t know why they did that, but I see it a lot in old local houses (not even the teeniest bit of counter for working between them).

    In any event, we put the fridge in the old closet, and put in the stove. Spouse built cabinets from scratch (using the local HS shop) to fit around them. Then I liked them so much, I had him replace the other lower cabinets (they were too shallow for a dishwasher, and I wanted one). Now we have nice cabinets and a tiled counter, all for about $6k ($1k of that was the tile).

  15. Danielle January 4, 2012 at 11:40 am #

    Wow, that looks really good! I am such a fan of the huge difference patching and painting walls gives a house. It’s miraculous. More owners should realize tenants are not fond of sitting inside dozens of white walls!

    I agree with your philosophy too – as long as there are some great focal points (such as the shower and vanity you built) it makes the entire space look luxurious. But also, in a smaller house, you don’t NEED very much, and in fact it looks worse to have a huge vanity crammed in the bathroom so you have to step aside and contort yourself to close the door!

  16. Mr. Dahlin January 4, 2012 at 12:00 pm #

    I never heard of open-front shelving units before but I think they look great. I’d like to see a picture of the sink when you get a chance.

    I am a renter myself and often struggle with the cheapness I have to endure. If I could negotiate for better bath/kitchen items I would but most landloards don’t want to do anything because they are managing too many properties or “doors” I guess. I think your stratagey of being a really good landlord of a few propterties is a wining and rewarding one. You get the most amount of control and higher profit margins.

    Your blog constantly challenges me to save more income. That is the challange for the new year. I want to try and save at least half of my gross income or more.

    Happy New Year MMM.

  17. Anthony January 4, 2012 at 12:36 pm #

    Great work! I actually quite like the utilitarian look to the kitchen. The open cabinetry would keep the misses from buying unnecessary things for the kitchen, as she’d go crazy if it became cluttered. The tile in the shower and countertops is quite nice, and by using (what looks to be) the same tile, you tie the house together nicely! Is the rest of the bathroom done in real tile as well, or a laminate?

    Also, did you do anything else to the exterior? Such as mask the cinderblock look to the porch, cleaning up the “rock garden”, or (somehow) routing the gutter drain so that it doesn’t reach across the walkway? Also, did you happen to do anything to the tree that looks like it’s swallowing your house?

    • MMM January 4, 2012 at 8:41 pm #

      Of course it’s all real tile! Mr. Money Mustache HATES vinyl and laminate products :-)

      Those outdoor things will get fixed as well – we’re going to install slate tiles around the sides of the porch and on its front steps to cover the old broken blocks and concrete. The “walkway” you mentioned is actually a neglected garden, so some plants will eventually spring up to hide the gutter extension (and they will appreciate its water as well). Tree could definitely use a trim too.

  18. Kellen January 4, 2012 at 1:35 pm #

    Your kitchen is super stylish. I think you’re correct that the high-quality sink is key to convince a viewer that the whole kitchen is high quality – if one piece looks shoddy, then the viewer immediately starts looking at everything with a critical eye. I think that was probably a huge part of making renters view the kitchen as “cool” instead of just “different.”

    Plus, Ikea cabinets aren’t even really that nice, and after looking at a few homes, I can pick them out a mile away and know that it means whoever renovated it bought the cheapest stuff they could find.

    • DB December 3, 2012 at 8:21 pm #

      No no – Ikea cabinets are great! They are incredibly sturdy and hold up extremely well to lots of abuse (like our two year old hanging off of the doors / drawers whenever our backs are turned). Don’t confuse the quality of other Ikea products with the quality of their kitchen cabinets – they are really excellent and worth a look for anyone redoing a kitchen who is even remotely DIY-capable.

  19. poko January 4, 2012 at 1:55 pm #

    Chiming in to add another “Fantastic job!” comment to the chorus.

    I too, wish I had the knowledge to do all these improvements. My next big home project is to build some built in shelves (and maybe cabinets) in our home office/study.

    I’m itching to redo our kitchen, but I can’t convince myself to spend money on it. The previous owner outfitted it with the cheapest cabinets from Home Depot/Lowe’s stained a color I’m not fond of, along with a pale pink tiled countertop :-/
    I would just paint the cabinets and get a new counter top, but the kitchen has two corner cabinet areas that are currently inaccessible/wasted space, so new cabinets would allow us to re-claim those corner spaces for better storage.

  20. Brave New Life January 4, 2012 at 3:49 pm #

    Very nice. This is exactly the type of project I’m hoping to try when I quit my job. The difference between you and I is that I can barely change a light bulb without having to look for a youtube clip to show me how (which is exactly why I know I need to quit and start learning these skills!)

    How many hours would you say you and your buddy put into this?

    Or, my real question, I’m wondering if this is something that I could do on weekends with my kids playing while my wife and I do work.

    • MMM January 4, 2012 at 8:25 pm #

      It was about 200 hours of work for me, and a yet-to-be-determined amount from the painters/helpers (maybe 100-200 combined?). I worked about 30 hours per week, since I did it all during the hours my son was in Kindergarten :-). Renovating a junker investment house like this would probably take a bit too long to do on just weekends, although any size of project can be done on your own home over the weekends, since there is no cash drain or time limit.

      • jimbo January 5, 2012 at 8:55 am #

        Any insight on how you handled/handling the investment with a partner? A friend and myself reno’d, rented, and later sold a house a couple years back. We had a few discussions, after the fact, of hours worked, work done, profit split. For example, logging hours is one thing, but an hour working on drywall vs an hour raking the grass are two vastly different jobs. In hindsight, I will probably not take on any partners for future ventures, but simply hire them on a per hourly basis. It mostly worked out in the end, we are still friends, and both are renovating our current houses, but will probably go the route I mentioned in the future…while still utilizing each others help and tools.

  21. Dan January 4, 2012 at 4:01 pm #

    Wow. Impressive. Thanks for the blogs on the project, great vicarious living.

  22. Fishingmn January 4, 2012 at 4:10 pm #

    Looks like you’re doing a quality job.

    My only quibble is that I think your returns would work better for a flipping strategy than a rental on that property. If you bought it for $100k, then put $20-30k? into it and sold it for $185k you’d have a pretty good return.

    If you bought it for $100k, put $20-30k into it and rented it for only $1200/month then your return isn’t all that great. Plugging some cost estimates into my investment property spreadsheet shows a cap rate of less than 7%.

    That said, I do think rental real estate is a fantastic place to invest right now.

    • MMM January 4, 2012 at 8:12 pm #

      Yes, it would make a nice flip with these buy/sell numbers as well. But we’re taking the long view and my friend who is the owner was interested in boosting his background long-term income at this point rather than a quick cash infusion.

      Note that your investment property spreadsheet is very different from mine – our cap rate based on money invested is about 10% after taxes/insurance. That’s because property taxes are low here, we never have vacancy, and maintenance is in the range of $0 – $300 per year on a newly renovated house like this.

      • Fishingmn January 5, 2012 at 9:42 am #

        The only way you’re getting to a 10% cap rate is by having taxes & insurance total $2,000/year and figuring $0 expenses & $0 vacancy (assuming you’re into the place for $125k).

        I would NEVER suggest to other real estate investors that they use assumptions of no expenses and vacancy. A good rule of thumb is that expenses/vacancy will equal 40-50% of your income. Instead it looks like your factoring in a number in the 15-20% range which is not realistic for the vast majority of investors.

        • Chris January 5, 2012 at 1:17 pm #

          MMM isn’t the vast majority of investors. :-)

          The best I can tell, he evaluates all the “here’s why you can’t do this” stuff, throws it aside, and does it anyway and is wildly successful at it.

          • MMM January 5, 2012 at 9:40 pm #

            Well THANK you, Chris, at least we’re not all doubters here. If we behave like the vast majority of people, we’ll have credit card debt and car loans and we won’t get to retire in our thirties.

            First of all, Fishing Man, the property taxes+insurance total about $1500 per year, which leaves $500 per year for maintenance, way more than I have ever spent in this category. Secondly, you are correct – there is NO VACANCY at the Mr. Money Mustache hotel.

            Sometimes I get double rent, when people ask if they can move out before the end of a lease and another family moves in immediately. But never zero rent. I’m not saying it will never happen, but so far there has never even been a close call.

            How does one avoid vacancies? Hey – great topic for an article in the near future!

  23. Shawn January 4, 2012 at 4:35 pm #

    chorus continues………very nice work! I have done a fair amount of renovation and your statement regarding building from scratch being cheaper than renovating is soooooooo true. That is, if you are not careful like you have been.

    I am planning to retrofit more of a kitchen in our basement living quarters in the near future. I am elated to see you used OPEN cabinets! My cabinets will a couple of wire shelves and two small stainless steel commercial grade prep stands on casters with a bottom shelf and the top outfitted with granite salvage scraps on top for beauty and movable workspace function. His and hers. Not only usable and cost saving, this idea should encourage us to keep the kitchen clutter down as all will be visible.

  24. Chucks January 4, 2012 at 4:45 pm #

    Looks awesome!

    Are there any tricks in knowing whether or not a property is going to require expensive renovation? Like lead pipes or absolutely zero insulation, for instance- I don’t think anyone would want to live in a place with that. Also, what’s the best way to get experience if you don’t have much? I can assemble IKEA furniture, but I’d be a little hesistant to do try my hand at construction that could cause a roof to collapse on someone’s head if it’s done incorrectly.

    Also, is there any sort of rule of thumb for figuring out the sort of return you’ll get on certain upgrades-like deciding between vinyl, laminate, tile,hardwood, or I don’t know, gold-inlaid marble floors?

    I may be looking at buying my first home in the next year, and would like to try and get a multiunit (4-6 unit) house near a university, spruce everything up, live in one unit and rent out the others to the point that it could generate income in excess of mortgage and other expenses. With some mortgage rates right around inflation after tax deductions it seems like it could be a decent way to reduce my current housing/rental expenses and free up money for investment elsewhere while maybe generating a little income. If you feel like writing up some house hunting tips or philosophy, I’d appreciate it.

    • jump January 5, 2012 at 9:55 am #

      Two quick thoughts: 1) I remember the college house my friends and I lived in, we didn’t respect it much. Beer soaked floors and scuff marks were the norm. That’s not to say you couldn’t filter those tenants out thought. I’ve read good things about the opposite end of the spectrum though….renting to folks nearing or in retirement. 2) Investment property mortgage rates are not near the same, low rate you see advertised everywhere.

  25. Nate R January 4, 2012 at 6:15 pm #

    What’s up w/ the roof? You mentioned it would need roof work in previous posts, but it still looks like the shingles are failing and untouched?

    • MMM January 4, 2012 at 7:56 pm #

      Yup, shingles hadn’t been replaced when that exterior photo was taken (mid-December). In fact, due to the tenants moving in early we focused on interior stuff until Dec. 29, and are just finishing up the roof and some garage details this week.

  26. jessica w. January 4, 2012 at 8:41 pm #

    I love everything but the open cabinetry, I think spending a little more for the Ikea cabinets would have made all the difference,but that might mean it puts you needing to charge too much in rent. I think it looks great, I just hate the idea of dusting my pots or pans. Other than that everything is awesome, thanks for so many great instructions!

    • Adam Jaskiewicz January 6, 2012 at 4:29 pm #

      I have some open shelving in my kitchen, and never have issues with stuff getting dusty. That’s because what’s on those shelves is stuff I use often enough that it gets washed before needing to be dusted. If I don’t use it that often, it goes in a closed cabinet, or gets given away. I love the open shelves, because I can see exactly where everything is, and grab what I’m after quickly.

      • MMM January 6, 2012 at 4:33 pm #

        Good point! I currently waste a lot of time opening and closing doors to find the bowls and dishes I want in my chaotic kitchen. Open fronts will make this more efficient when I eventually build some new custom cabinets for my own house.

        Also, caring about dust is highly Non-Mustachian. I mean, come on – we evolved to live in forests and plains and eat from our own hands or off of sticks and rocks. A plate with a few molecules of dust on it is a huge upgrade from this – let’s not get all obsessive-compulsive and start caring about the minute cleanliness details of our plates as well, like the people in the dish soap commercials!

  27. jlcollinsnh January 4, 2012 at 8:46 pm #

    Very, very cool work here Mr. MM…

    like the others I look forward to seeing the number details.

    At the movement we are in the process of staging our house to sell in this challenging market. Painters finished up today and the carpet goes in tomorrow. Then the stagers return to put in the final touches.

    This kind of vision is something I completely lack and I am in awe of the simple suggestions that make a huge impact. Checking out your work above, clearly you share the “vision gene.”

    Like Fishingmn, I agree this is a great time for RE investing and I also very much agree with your approach of adding the extras to attract the best tenants. Our next stop is to be renters. We are fairly fussy and have found only two building in our area that meet our expectations. Apartments in them go fast. The demand is there.

    Wish I had your talent. Well done!

  28. Amanda January 4, 2012 at 8:48 pm #

    Just for the record, you can be my landlord anytime. That place looks dreamy compared to most rentals around here, which are considered “luxury” if they aren’t falling apart and all the appliances work.

    • Ana January 5, 2012 at 1:20 pm #

      Beware of what you wish for. Landlords like MMM will not really tolerate any late payments and any aggravating behavior on the premises. But if you are a good tenant, I believe, it would have been a great match. I’m sure MMM charges top dollar for his rental ;)

      • Amanda January 6, 2012 at 7:39 am #

        Luckily, I always pay my rent early and I’ve never trashed a place or made unnecessary noise.

        I’m aware of the fact that that makes me a rarity in a campus area though. But I tend to have a very good relationship with my former landlords, assuming they didn’t try to screw me over on necessary repairs ;)

  29. Chris January 5, 2012 at 1:19 pm #

    This turned out really nicely, I’m super impressed!

    If you do another, I’d love to come up and take a look at the progress!

  30. Ana January 5, 2012 at 1:22 pm #

    MMM, what kind of woodworking tools would you say one needs to work with wood like you did very nicely in this project.
    I greatly enjoy reading your posts.

  31. Kjnanny January 7, 2012 at 10:11 am #

    MMM:

    Very interesting and sounds like a bit of fun involved as well as creativity!!
    Okay.. here is one for you to figure out… is it worth it or not:
    A house in lower North Mankato MN is up for sale. The owner has to sell (sad deal) and owes $11-12,000 in property taxes as well as a $5,000 lein on house. The owner has to come up with $45-48,000 in order to be debt free again and is asking $49,900 for the house. The house is in deplorable conditions but very fixable. One contractor quoted $55,000 to fix it up to a value of $86,000.

    The house is in a nice area, one block from school, one block from attractive and large park. It has two connecting rooms on second floor (closed stairway) and two bedrooms main floor with small bathroom. A living and dinning room connected and a very tiny kitchen (can’t sport a large frig in there!). The basement has mold (been tested and non toxic). There is also water damage around windows, roof done in 2009. Some of the windows are new. Basically it needs to be gutted. Floors are surprisingly not bad (all wood) except kitchen and bathroom. The house I think will be on the market today.

    I think the contractor price could easily be lowered if one does it themselves (but gives a base cost for some). Do you think this property is worth fixing up and selling for a profit or renting it out? I for one am not experienced enough to know. I do know there seems to be other people interested as well.

  32. Nathan January 7, 2012 at 12:01 pm #

    So what do you do about the new (2010) lead paint rules? Since you did the work yourself, I’m assuming either you are certified, the house didn’t have lead paint (unlikely, since the it was built in ’35), or there is a loophole. I’m gearing up to do my first rental rehab since the new rules went into effect, and I’d love to hear your take on things…

    • David B July 6, 2013 at 12:46 pm #

      Doesn’t seem to apply to renovating a house you own.
      From the EPA site
      http://www2.epa.gov/lead/renovation-repair-and-painting-program-do-it-yourselfers

      Although the Renovation, Repair and Painting Rule does not apply to homeowners renovating, repairing, or painting their own homes, do-it-yourself projects can easily create dangerous lead dust. Protect your family and home – set up safely, control the dust, and clean up completely.

  33. Rob January 9, 2012 at 2:50 pm #

    Interesting post and really good work. I am a home improvement wannabe but possess modest talent. But, the combination of above average interest and average skills makes me appreciate those with ability.

    Like the Blog as well.

  34. LH January 10, 2012 at 4:21 am #

    Well done!

  35. Tim January 11, 2012 at 8:34 pm #

    Looks like you did a great job! I’d like more details about your shower, since I want to update my bathroom. My current project estimate is about $1,800 to replace a tub with a tile shower, which includes materials and labor, and I have other items to include.

  36. Mr Mark January 13, 2012 at 2:44 pm #

    Great post & renovation MMM!

    What do you think of rental units that have a condo-fee?

    • MMM January 13, 2012 at 4:16 pm #

      A condo fee is just a number to subtract from your profits, just like maintenance expenses and property taxes and even occasional vacancy. Taking samples from around the country, some units might have high condo fees but low property taxes, and some might have low fees and high taxes.

      It doesn’t matter what all these fees and costs are called, it just matters what they all add up to. If your rent is much greater than all the fees including the cost of borrowing the money to pay for the unit, then you might have yourself a good rental.

  37. Melissa Wannabe blogger March 21, 2014 at 3:56 pm #

    I did it! Finally finished all of 2011 posts… There sure was a lot of info…
    So this really cool but I have a question… You worked on your own house making improvements right? How do you go about doing those improvement when you have a kid in the house?
    I am thinking it might be better to buy a fixer upper( not that I have any expeience with such things) but my youngest will still only be 2 yrs old and I’m worried about it being bad for the kids health. Like paint fumes dust … You mentione lead pipes in old houses… How did you deal with those issues you seem to be very health conscious … Or am I exaggerating stuff?

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