Mr. Money Mustache » The Foreclosure Project Early Retirement through Badassity Mon, 24 Nov 2014 18:57:42 +0000 en-US hourly 1 The Foreclosure Project: Final Numbers and Pictures are In! Fri, 27 Jan 2012 13:18:55 +0000 It’s time to tie up some loose ends in my reporting to you about the Foreclosure Project.

In the previous article, I mentioned that we had rushed to finish the interior work as the house got snapped up by an eager family for a late December move-in. I posted some hasty photos from the few I had taken, and you readers requested more pictures and final details on the numbers regarding time and money spent for the renovation. So let’s start with the numbers:

My portion (carpentry, plumbing, electrical, roofing, misc.):
Estimated Work Hours : 244     Actual Work Hours: 224
Estimated Materials : $5158  + paint and misc ($2k) = $7158
Actual Materials: $6995

Work from my partner in the project: 200 hours
Additional labor paid to others: $2058

Counting the primary partner hours at $35 as we did in the budget, this adds to a total renovation cost of: $24593

Wow, that IS remarkably close to the $25,000 I originally estimated before even buying the house. But there’s an upside to this – it includes lots of work we consciously threw in once we got going and decided to make the place nicer than originally planned. For example, at least $1000 went into jazzing up the front porch and its roof, I cut out cabinets and did plumbing to allow a new dishwasher, and we did more fancy bits of trim and woodwork around doors and inside closets than originally planned.

I feel that going for this slightly higher level of quality is what allowed the house to rent for $1200/month instead of $1100. When you consider the extra $1200 per year of rental income, forever, it actually justifies a $12,000 investment (assuming you want a 10% annual return on your investment). In this case, we got that extra boost by only spending a few thousand extra.

Just to review a few more of the key figures:

Original purchase price of the house: $113,500
(price was originally 115k, but at the last minute we negotiated an additional $1500 off the price for roof/plumbing repair)

Appraisal, lender, inspection, closing fees, etc: $0 <- a huge benefit of paying cash for a house.

Renovations: $24,593
Utilities and taxes during renovation stage: $500
Total Cost After Upgrades: $138,593

Annual Property taxes and insurance: $1600
Allowance for Maintenance: $500
Annual Rent @1200/month: $14,400
Net annual cashflow: $12,300

Cap rate: $12,300/$138,593 = 8.9%

That’s only a moderate cap rate by bigtime landlord standards, but it is exceptional for a single family residence in this area.

Apartment buildings and multiplexes are more profitable on the surface. But the Single Family house has certain advantages as well: maintenance and hassle is low as a percentage of the income, because you only deal with one person for this $1200 per month, while a landlord of $600 apartments has to manage two tenants.

If you think of it from an early retirement perspective, you can raise a family comfortably with just two or three rental houses like the one described in this article. That implies a nice, full, Early Retirement,  on somewhere between $277,000 and $416,000 of savings. In exchange, you just have to manage 2-3 properties. They are effectively creating an 8.9% “safe withdrawal rate” instead of the industry-standard 4% that you use when planning a stock portfolio. (depending on your area, you may have to discount a certain percentage for vacancy, although I always shoot for 100% occupancy myself).

Another advantage of the SFR is that its underlying value can rise even faster than its rental income, in the event of a strong housing market. An apartment building is generally worth only a multiple of its rental income. A house, on the other hand, is worth whatever an emotionally-driven home buyer is willing to pay for it. With these upgrades, this house would sell for a little over $200,000 on today’s market. So even after paying ourselves separately for labor, we created a profit of over $60,000 in just three months. In the future, I believe this neighborhood will continue to appreciate more quickly than the rest of my city since there’s only one historic district, it is close to all of the city’s best amenities, it can never expand, and most people who move here from other cities tend to choose the “old-town” area as their first choice.

Some will say that I should therefore use $200k as the cost basis when calculating the cap rate, or that we should sell the house immediately and start again on another one. Both of these are valid arguments, but in this case my friend is the owner and wants to hold onto it for future income and appreciation. (I just have an interest-earning loan against it that will be paid back to me fairly quickly).

So with all of the business out of the way, let’s move on to the before and after pictures! Keep in mind when evaluating quality and fanciness that this is a high-speed and low-cost project. This work is not four-seasons-hotel-lobby quality – my only claim is that it represents a pretty thorough transformation of an entire house including lots of its hidden parts, for under $25,000 and in under ten weeks..

You can click on any image to get the full-sized version.

Note the wire barnacles, shredded roof, and sagging/rotted porchThe porch was rebuilt to have blue-stain pine columns and beadboard ceiling, as well as a galvanized roof just for some flair. Still to add: slate sides/steps

View of the back room and deck

View of back room and deckMore random wires removed, broken hot tub sold on Craigslist (!), deck stained, and of course house painted
Tragic garage! Roof was slowly rotting away due to missing shingles. 1000 abandoned wasp nests plus and vines growing in rafters.Same garage with very barebones upgrades: paint, siding (not quite done in pic), and the $4 windows from Re/Store
Old front door, complete with foreclosure noticesNew front door ($20), with new trim, beadboard ceiling, nice posts, sweet rocking chair, etc.
Living room, before. Doesn't look that bad in the picture, although it had a cracked/sloped doorway to kitchenNew wider doorway with nicer trim - and straightened floors. (my friend the painter also sanded down and refinished all the wood floors)
Old kitchen countertop. Not a bad layout and somewhat quaint. But the shelves were only 13.5" from the countertop, and all components were just really shitty, especially the sink/faucetI kept the same basic look but made new upper cabinets that fit the space better. Tiled the countertop and backsplash with virtually free recycled tiles. Changed door hardware, new sink/faucet. We also cut out one base cabinet and added a dishwasher instead, (acquired for $20!!)
For over sixty years, the fridge and stove sat in this ridiculous empty area across the kitchen. Somebody added a hot tub and air conditioning to this house, before they even had a place to put the package of EGGS before frying them for breakfast. INSANE!!!!Two custom-built (but very low cost) shelving units with matching tile countertops to the rescue. Along with a flat-top range from Craigslist.
The third view of the kitchen - empty space near the windowWe decided to keep the old pantry and just refurbish it, and the empty space was perfect for this nicer fridge.
The bathroom was by far the worst room in the house. Several ladies ran from it while holding their hands over their mouths to prevent vomiting. This picture, while taken after I had removed the old fixtures, still represents approximately how shitty it was.The new bathroom is quite nice, but I still don't have any great pictures of it - it was too full of towels and toiletries to photograph on this day. But here you can at least see the custom shower curtain I welded up to match the shape of the tile showerpan I had built.
Bathroom wall, with hole for new second doorway framed inNew bathroom sink and table, made out of antique sewing table found for $20 used
The Back Room - before - Laundry machines were at the North end, which was blocking a bedroom windowAfter: moved laundry area to the South end, opening up the bedroom window area for this handy office area just off the kitchen
Random shot of a newer light fixture. Formerly there was a peeled white ceiling fan with a single globe light bulb - for the whole kitchen! Kitchens need multiple bright light heads that you can aim at different work areas.Random shot of the new front door, with the cozy porch beyond, surrounded by real people's stuff. Home sweet home.

I really enjoyed this project, and I will probably repeat the process when I have enough uninvested cash collected to fund a similar one myself. Before then, I may even team up with another investor* to keep the fun going in the mean time (and accelerate the cash stashing process).


 * Interested in being the investor? Or perhaps you have a house in Hawaii that needs attention during the winter season? Get in touch with me through the contact button of this blog! It’s just an off-the-cuff idea at this point, but you never know what good things come into being when you start throwing around inspirational business ideas with new people.

Epilogue, 1.2 years later: Wow, that little note at the bottom of this article did lead to lots of fun. I heard from at least a dozen interested investors (although I in the end I decided only to invest alone for my own projects, I’ve helped a few buy their own places separately). And The Hawaii comment led to this.

Update: Over two years have passed and this project continues to be a good memory. The house has experienced zero vacancy, no maintenance issues, and a strong local market has allowed the rental income to increase to $1500 per month.

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This Old House (Cheap Edition) Wed, 04 Jan 2012 13:13:22 +0000 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 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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Foreclosure Project: Increasing Profits with the Recycled Building Materials Store Tue, 15 Nov 2011 13:42:46 +0000 You may or may not have noticed that I’ve been typing articles a bit less frequently in recent weeks, and that is for good reason: I’m doing real work these days!

The foreclosure project is going extremely well so far, both when measured against the original schedule and budget, and when measured on the fun-o-meter. We’ve had a few interesting design inspirations that should make for a nicer interior and exterior feel than we originally anticipated, which may lead to a higher rental income than the original budget as well.

The work completed so far:

  • Tearing down a portion of a wall to create a more open feeling between the living room and kitchen
  • Using a car jack to lift up the floor framing and adjusting some old support columns in the crawlspace to straighten a crooked floor
  • Framing new doorways between the bathroom and each of the two bedrooms
  • Removing all of the old ice-damaged copper pipe plumbing and rebuilding a nicer system with PEX pipes
  • Removing the cast iron and lead drain plumbing and rebuilding with ABS pipes
  • Clearing out the old bathroom toilet, tub, sink, and floor, reinforcing the subfloor, and building a new concrete showerpan as part of a fancy new corner shower. And adding the associated plumbing for shower, toilet, and sink
  • Creating a new area for the laundry machines (which mostly means new supply and drain plumbing), since they were previously jammed into an awkward corner near a bedroom window)
  • Swapping out old cracked and painted plugs and switches for new ones throughout the house
  • Starting to build a new kitchen shelving/countertop unit
  • Adding a nice new front door

I’ve got a few interesting how-to articles in the works to document how some of these things were done, but I figured I should tell the renovation tale in chronological order, which starts with shopping for the materials needed to rebuild this run-down house.

When you do a home renovation project, the materials are a huge part of the cost – both to your wallet and to the Earth. A project like this requires windows, doors, plywood, studs, tiles, concrete, lighting and plumbing fixtures, and many other things.

The interesting thing about renovations, at least in the wealthy Boulder County area where I live, is that people are always doing them. Middle-income people buy 60-year-old  fixer-upper homes and build them into more comfortable and energy-efficient places to live. Upper-income people often buy higher-end homes and make major changes even when the houses are quite fancy to begin with. Meanwhile, commercial buildings are always being built, torn down, and remodeled by larger companies.

The result of all of this activity is a huge surplus of building materials. Extra tiles left over from someone who bought too much for his bathroom. Entire kitchen cabinet sets and high-quality windows and doors from the homes of rich people who grew tired of the current layout of their house and had it rebuilt. Even unused beams and industrial-grade components from office construction projects. And of course various fixtures and parts of every type.

These things end up either on Craigslist in the “materials” section, or in the recycled building materials store. There is one of these stores in Longmont where I live, and one in the neighboring town of Boulder, and my house-renovating partner and I decided to hit up both of them to see what we could salvage for our project. And it was quite a score, since in just one trip we acquired these items:

A beautiful heavy-duty solid wood front door (with 12 panes of glass in a grid formation) for $20 (roughly comparable to a $400 door at Home Depot)
A set of four double-pane 2ft x 3ft window sashes in new condition for $4 each (to be used in the garage) (value about $300)
About 80 square feet of tile for 50 cents per square foot (total $40, worth about $200 new)
An apparently unused and very nice toilet for $30 (new value about $140)

The total spending on this trip to the store was $106, for materials we actually needed, that would have otherwise cost $1040. A savings of over 900 bucks, just for embracing the idea of used rather than new materials, and knowing where to shop!*

The limitation when buying your materials second-hand, is that you have to adapt your project to fit the materials, rather than custom-ordering the materials to fit your project. But that is pretty much a core concept of the Mustachian Way, so it is good practice for life in general.

For example, the new front door was the standard 36″ wide.. but the old door was only 32″. This worked out well, because you really should have at least a 36″ door in a house anyway, in case a future resident needs to move in a large refrigerator or couch. It is also necessary to allow someone to roll a wheelchair through comfortably. So today I cut out the old door and part of the wall, and framed a new wider opening into the front of the house. It took quite a few hours of cutting, routing, nailing, and even occasional swearing, but it was VERY satisfying to hear my heavy new door click precisely into place, fully weatherstripped and insulated, as I locked up the place to go home this afternoon. And the whole house now looks better when viewed from the street!

Since the recycled building materials store runs on donated items, not everything there is suitable for use in a high-quality renovation. The windows and doors are surprisingly good, as are the tiles and toilets and some of the kitchen cabinets. But the appliances, lighting, and plumbing fixtures are usually things like green or almond-colored fridges and stoves or gaudy brass faucets. For these things, you simply move on to Craigslist materials.

Even after passing through these two steps, I still end up purchasing plenty of new things. Wood, nails, adhesives, shower valves, plumbing, and many other things are rarely available used.

But by getting some of the most expensive things from these alternative sources, you are really “focusing on the big wins**”, and shaving thousands off of any renovation project budget.



* Still think we’re going to have trouble with our profit margin, Joe? ;-)

**I  wonder if Ramit Sethi shops at the used building materials store?


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Foreclosure Update: House Bought, Plans Made, Bathroom Destroyed Sat, 29 Oct 2011 18:02:48 +0000 Since the last update in this series, there has been a certain amount of drama on our latest road to Real Estate Riches. There’s always drama when you buy a house, because relatively large sums of money are involved, and the sale involves a large number of people working together. A buyer and seller, real estate agents on both sides, a title company, and various inspectors, appraisers, contractors, lenders, insurance agents, and even lawyers depending on where you live. In the likely event that one or more of these people is incompetent, the whole production starts to take on a tragicomic quality, and you laugh even as you slap yourself in the forehead repeatedly and invent new swear words.

In our case, when inspecting the house, we discovered that both the roof and the plumbing system were inadequate to pass a standard lender’s appraisal. In a normal sale, the buyer requests that the seller get these items fixed before the closing. But getting stuff fixed is beyond the technical competence of most big, slow banks, so at best you can negotiate additional dollars off of the purchase price. We scored an extra $1000 towards the roof and $500 towards the plumbing, even though fixing these things was already part of our original budget when first touring the house. So that goes straight to profit. But the fact that the house was un-appraisable meant that we had to pay cash for it instead of using bank financing. Paying cash came with the added advantages of avoiding appraisal and lending fees. Also, being an enthusiastic insourcer, I always do my own home inspections, saving a few hundred extra per house. All of this just further reinforces my belief that Cash is King when it comes to running a small business.

Other minor annoyances included the unplanned disappearance of several hundred dollars of landscaping materials that were originally in the garage, courtesy of the bank’s unapologetic maintenance contractor who was “just following orders to remove construction debris”, and missed deadlines and slow email responses galore on the part of the title company. Luckily Mrs. Money Mustache is a patient and meticulous real estate pro and she compensated for it all by watching the people and deadlines like a hawk. In the end, it all worked out as it usually does, and on October 25th, the MMM Foreclosure Investment Team closed on the house.

I had already gone through the house and done a rough scale diagram as I always do for renovation projects – this forces me to think through what needs to be done in more detail, and it also allows me to plan material purchases without having to frequently re-measure everything at the site. I keep a copy of this plan on my phone and can whip it out at any time during a trip to the building supply store.

If you’re looking at the plan at left and are curious about the details: the only change we plan to make to the existing floorplan is to add a second door to the bathroom, making it a “jack and jill” arrangement that can be shared from both bedrooms, instead of only accessible from one as it currently is. This requires a full redesign of the bathroom, as it previously had a gigantic clawfoot tub jammed into the undersized room, a grotesquely squeezed-in toilet that was almost touching the side wall, and a miniature pedestal sink with nowhere to put personal belongings. All wrapped in a crooked, soggy, and mold-stained room.

And the kitchen will get some more countertop space, since it is just a big room with a single 8 foot countertop strip right now, and a lone fridge and range sitting off in the middle of nowhere across the room. One of my pet peeves in kitchen design is having fridges and stoves that look like a bulky afterthought instead of being integrated nicely to the kitchen.

Once I have a sketch, I like to walk through and make a list of what needs doing. Then I type the list into a spreadsheet, and make some conservatively high estimates on the labor and materials to figure out the total time and cost of the project. The simple spreadsheet linked above tells me that we’re going to spend about $13,700 on the carpentry and materials portion of this remodel (including new kitchen appliances), which leaves about $12k for painting, landscaping, and other tasks if we want to stick to the original $25k budget. We did score an additional $1500 off of the purchase price from the bank, which adds to the safety margin of this project. Getting good estimates is pretty important, especially for renovations larger than this one. Since I’ve done all of these tasks many times over the years and always keep spreadsheet records of how long things take, I find that my time estimates are pretty good these days.

Yesterday, with the appropriate building permits in hand, I began in earnest on the destruction of the old bathroom. It was a true pleasure, because it was such an incredibly ugly room. The first step was to strip it down to its original plaster walls and wood plank floor, then rebuild from there. This meant hauling out the clawfoot tub (which will be later restored and sold on Craigslist), the toilet, the sink, the weird vinyl wall material, and the stained vinyl floor over top of soggy particleboard. Above you can see a picture from yesterday in the thick of the action. The excellent mess and filth just makes the eventual finished product – a pristine and cozy tiled lair of comfort – all the more satisfying. The next step will be bonding a thick, level layer of structural plywood over the old plank floor, upon which we can build the new bathroom.

Part of the fun of rebuilding the bathroom is in fixing all of the haphazard plumbing in the basement. Like most old homes, this house has endured over seventy years of hacking and repairs on its plumbing system. Cast iron is smooshed together with sections of Pure Lead(!), rusty galvanized pipes join through heavily-corroded adapters to copper, rubber joints splice in various newer parts made from ABS (black plastic). All of it hung loosely from the ceiling and zigzagged at awkward angles. With great gusto, I took a sledgehammer in each hand and crashed them together from opposite directions onto the biggest piece of cast iron pipe*, and kept pounding until every bit was laying shattered on the concrete floor. I pulled out the remaining loose fittings from the ceiling, cleanly cut off all of the spaghetti of copper and galvanized supply pipe, gathered up the 320 pounds of various metals for eventual recycling, and then proudly surveyed my new blank slate. On the next day I’ll begin rebuilding everything in a tidy and easy-to-maintain way.

Work is seriously underway and I am seriously excited. I have started having Construction Dreams again, and I can’t wait to get back to the job site whenever I have free time available for work. In an upcoming article, I’ll teach anyone interested how to do their own supply and drain plumbing using PEX and ABS pipes, using the bathroom as an example. It really is easy enough to fit most of it into a single blog post – a fact that the world’s $80-per-hour plumbers will surely not be pleased to have revealed ;-)



* Remodeling tip of the day: if you’re ever removing cast iron pipes from an old house, use a sledgehammer instead of a saw or grinder – it is both speedy and satisfying.



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Let’s Buy A Foreclosure Episode 2 – What is the 50% 2% Rule? Mon, 10 Oct 2011 12:13:59 +0000 While we were all sitting around anticipating the upcoming closing on the bank-owned house down the street, a comment came in on that first article in the series. A guy named Joe told us this:


“This house is cash flow negative with 100% financing (and the many issues you are ignoring like maintenance/repairs, vacancy, management, etc), meaning forcing cash flow by paying cash is a low return on your investment.”

“What!?”, I thought, “This is the best rental house I’ve ever seen so far in my own area!”. I wrote a big BZZZZT, WRONG!! comment to him in response, which I will now admit was actually a Complainypants move on my part. Also, it was midnight on Friday at the time. And I was drunk. I did, lucklily, ask him to elaborate further, and he shared an enormously detailed comment which I have brought in to become the subject of this article!

While I still disagree with the wording of of Joe’s comment (I’ll present an alternate way to express it later), it turns out he is part of a Secret Badass Bigtime Landlord Community – something that I didn’t even know existed until he told me about one of the forums where they gather – a website called

Badass landlords are people who are even better at making money from rental houses than me – and therefore I must bow down and listen to their ideas rather than rejecting them because they know something I don’t. These are people who deal with the stuff so much, that they call a house an “SFR”, and they have so many rental units, they refer to them as “Doors”. They rack up these metaphorical doors faster than I can install finely crafted physical doors, and with the right techniques they can end up with nearly unlimited cashflow and equity over time. Here’s what Joe wants to tell us:

Okay, I’ll explain.

There’s something called the 50% rule and the 2% rule.  There are many, many discussions, evidence, etc. on BiggerPockets for these two rules of thumb.  I won’t go into detail to back them up, I’ll just explain them.  I assume you can use Google or their forum search to find the, literally, dozens of threads discussing them.

The 50% rule says that over time, 50% of your gross rents will go towards ALL your expenses.  This means taxes, insurance, maintenance, repairs, vacancy, management, etc. etc.  Obviously some areas have higher taxes, some houses will have lower maintenance, and so on, but studies and tons and tons of anecdotal evidence (from hundreds of people with hundreds of properties) have shown that about 45-50% of gross rents go to cover all that.

So the first problem with your post is that you are way under accounting for repairs and maintenance by spitballing a number.  Sure, your personal residence doesn’t have that much per month (because you take care of it and fix a small problem before it becomes big), and maybe you’ve had great tenants in your other house.  But the wear and tear tenants can make can be huge.  When you have to replace the carpet for $2k when a tenant moves out, or repair holes in the wall, that can get expensive.  No, the security deposit that they tried to use as the last month’s rent (so they didn’t pay that month’s rent) won’t cover that.  Yes, you can get a judgment against them, at lots of time and hassle.  Good luck trying to collect.

Will this always happen?  NO!  I’ve had GREAT tenants so far.  Do I account for these things due to knowing many, many, many other landlords deal with it, and I will have to eventually?  YES.

The second problem is you haven’t accounted for vacancy: the months where it sits empty.

The third, and maybe biggest, problem is that you’re way undervaluing your time.

See this recent Get Rich Slowly article:

And in YOUR recent commuting article, you put someone’s time at $25/hour.  I manage my rentals… but when evaluating a deal, I always calculate in the cost of someone ELSE managing them.  Then when I do it, I make more money, sure, but that’s not a higher return on my investment.  That’s a side job as a property manager.  You aren’t calculating in any management costs, therefore you are valuing your time at $0, and putting the “profits” of your management side job into your overall return and claiming an 8.3% return.   Further, rehabbing it will take time.  You count in the cost of materials and the purchase into your total expenses to calculate your return, but again, not any of your time.  Calculate what it would cost to HIRE someone to do the rehab you’re going to do, then do it yourself, but count that amount that it would cost WITH the cost of materials and purchase price to actually value your time.

On to the part I mentioned about this being cash flow negative.  With the 50% rule, you take 50% of the gross rents off for expenses.  Then you calculate the property at 100% financing.  If it cash flows then (usually most investors want at least $100/unit), then you’re good.  If it’s not cash flowing at 100% financing, then you’re essentially FORCING cash flow into the deal by paying more for financing. For example, if it’s cash flow negative at 100% financing, and break even at a 20% down payment, you wouldn’t want to put 30% down and go “Hey! I’m cash flowing $50/month, this is a great deal!” because you forced it to cash flow. You then could purchase it 100% cash and say “Hey!  I’m making $300/month, great!” when in actuality you forced te cashflow in, so you’re getting less of a return than you would putting the money elsewhere.

Now do I have anything against a cash purchase?  Heck no!  I’m in escrow right now on a cash purchase for a SFR.  But run your calculation AS IF you’re getting 100% financing, even if you aren’t, to evaluate it.

So let’s run the numbers on yours.  You likely aren’t getting 4.5% right now as an investment (non owner occupied) home.  Likely more like 5%.

Cost (with rehab): 140,000.
Annual rent: 1320.
50% rule: 6600 will be your cash flow.

The monthly payment on a $140k loan (this is counting the rehab, not just the 115 purchase price, because then you’re putting your own money in, and we want to compare as if you put no money in so you aren’t forcing cash flow) is:  751.55.  This doesn’t count taxes or insurance (which are typically included in a mortgage payment) because those are counted already in the 50% rule.  751.55 x 12 months = 9018.6 per year in principal and interest.  You’re losing 9018.6 – 6600 = 2418.6/year.  The novice investor would go “1100 rent – 751.55 mortgage = 348.45 cash flow!! YAY!!”  They forget all the other expenses.  You at least added in taxes and insurance.  But you forgot all the other expenses beyond those. Now sure, most months that investor WILL bring in an extra $350ish.  But then a pipe bursts, and they have to pay $1500 to repair it.  Then the tenants move out, and they have to spend $800 getting it move in ready. Then it sits vacant for a month, costing them $1100 in rent. ANd so on, until they end up losing approximately that 2418/year (it may even take a few years, when they have to replace the roof, or whatever).  But long term, over time, 50% of your gross rents go to costs.  Now YOU, MMM, paying cash, will immediately see cash flow.  And it will make you money over the year, because you forced cash flow into it.  You could be earning more on that money elsewhere.  Your real return would count in all those other expenses (including management, which IS calculated into the 50% rule), to show a cash on cash return of 6600.  That’s a return of 4.7%/year, and is not counting the rehab labor (or the denominator of 140k would be larger by that amount of the cost of the labor).

An 8.3% cap rate, without counting vacancy, way underguessing maintenance, and not counting management (plus any utilities that will be owner paid, like sewer), is way too low for the hassle you’re getting.  This is not a deal.  You CAN find a deal, however.  Today’s market is amazing.  This is not it.  Your cap rate should be at least 10-12% when counting the above things you missed, even in a cash purchase (easily double that with financing).

The 2% rule says, roughly, that you should be able to get 2% of the purchase price per month in rent.  It doesn’t mean to CHARGE that much in rent (because then your property will sit empty, as people won’t pay above market rates), but find what houses rent for there.  If the purchase price is more than 50X that rent (50X is the inverse of 2%), you’re overpaying.  If your house will rent for 1100/month, you shouldn’t pay over 55,000.  Now that one is hard to do, and many are a little more lax on that.  I personally shoot for a 1.5% rule on single family homes and 2% rule on multiplexes.  But basically your house purchase fails all the rules of thumb of real estate investors.

You might argue that this is different, the 50% rule won’t apply to you, your house won’t have as much maintenance, taxes are low in your state, etc etc.  And that’s fine, you might nitpick numbers here and there.  Whatever.  My point is that you are way underestimating some costs, and that your return is negligible with this “deal”.  (And if hundreds of people have come up with the 50% rule independantly, maybe look more into it before arguing against it, like the whineypants would immediately do.  Literally dozens of forum threads with hundreds of comments discussing it.)

You mention in your comment: “But I know many millionaire landlords, including myself, who have gotten quite wealthy with properties with considerably lower cap ratios than the one described in this article.”  Sure, with appreciation.  With markets poised to stay low for quite a while, cash (flow) is king.

This article is dangerous, because you’re telling your many followers this basic math is valid:
“Annual Property taxes and insurance: $1600
Expected annual rent @1100/month:  $13200
Net annual cashflow:  $11600″

You took your rent, subtracted off taxes and insurance as your ONLY expenses, and said that was your cash flow.  But you didn’t account for all of the above.  YOU can handle getting it rented and managing it, cause you’re retired.  YOU can handle all the repairs, cause you’re fucking MMM.  But you’re valuing your time at 0 then.  But what about your readers that can’t handle repairs? Can’t do management?  They’re suddenly losing money on this deal. That’s just dangerous for anyone reading this and not knowing enough (e.g. EVERY above commenter).

Plus what about vacancy, with even your MMM skills can’t totally avoid?  The one month it sits empty costs you $1100, GREATLY reducing your cap rate.

Again, 8.3% at 100% cash without accounting for many, many things, and paying yourself 0 on rehab and management is forced cash flow.  Bad.

I’m not a complainy-pants. I’m very bullish on Real Estate.  But there are better deals to be had.

I doubt you’ll listen to this.  You are excited (and should be!) about this new, fun project.  You have a partner you don’t want to let down.  You’re already in escrow, and likely already paid for a home inspection, and possibly appraisal.  (Any earnest money deposit you can definitely, 100% guaranteed get back right now, don’t worry about any EMD you’ve paid to a title company.)  You’ve told all these readers, who you don’t want to disappoint.  Likely you’ll plow ahead and get some cashflow from it, less returns than you could on a better deal, but hey, you don’t need the money, so it’s not a big deal.  Hope you do consider it and read more.  I have some good real estate books I could recommend.

Sorry if this comment was a little repetitive, there was some things to hit from different angles and reasons.  Hope you got something out of it.

And again, would be happy to discuss more. Sorry to burst your bubble, cause it is such an exciting project, and you’re usually right about things, so I’m sure it sucks to be wrong.  I haven’t experienced such a thing yet, but I feel for you.


First of all, nice work Joe. You made fun of Mr. Money Mustache and lived to tell about it, and brought up some very good points . I am still Super Effing Excited about this particular deal, and I am more confident than ever about its profitabilty, but I’ve learned quite a bit from your Fancy Landlord Community, and we do need to add some cautions to help prevent beginners from getting in over their heads.

Let’s start with how I would have written the critique, knowing both sides of the argument now:

“Dear Mr. Money Mustache.. this sounds like a fun project, but did you know that it would actually be considered “cashflow negative” using something called the 50% rule that large-scale landlords use to evaluate properties? This is mainly because most landlords experience much higher carrying costs than the ones you described in this article.”

First of all, I do have some immediate corrections to your assumptions that brighten the picture.

For the renovations, the $25,000 number I budgeted is not just for materials. That’s the all-in number, paying for materials AND paying myself a generous $35/hour for construction work, as well as paying a separate painting crew (my investor friend also runs a small painting company) for the extensive paint work.

Regarding ongoing maintenance costs for the house – this is a place where I do benefit from being “fucking MMM” as you so aptly put it. To a large-scale landlord who refers to properties as “doors”, a rental property is just a black box, where you put in monetary input to get an expected output. For me, a house is a living and breathing work of art. I feel the grip its foundation has on the soil, and the strength of its wooden skeleton and backbone as they flex when people walk across the floors. I hear the breath of its furnace as it sucks in outside combustion air and exhausts steam out the flue and circulates the heat extracted from natural gas around the interior. I feel the congestion when the house gets atherosclerosis in its supply or drain pipes and I lovingly slice out the damaged bit of its circulatory system and splice in a clean system of PEX and ABS piping which will last another hundred years.

Because of this, maintenance costs me very little. Just as I live a middle class lifestyle on 75% less than a comparable large-scale consumer, I think a Mustachian can make much more from any given rental house than an average landlord. I never assume my labor will be free – I do budget in paying myself at an hourly rate that would be $70,000-$80,000 on an annualized basis. But when it comes to repairing a house – your own or one of your rental houses, in many cases it is drastically cheaper to do things yourself. I can hire a furnace company to replace my furnace for $4,000, or I can buy a kickass 90%+ efficiency furnace online for $995, and install it with 8-12 hours of labor (under $500 which I gleefully “pay” to myself). I remember receiving a $1200 quote from a plumber to replace a 12-foot run of clogged cast iron pipe from a toilet to the rest of the drain system. This is about $35 of materials and 4 hours of work.

There are simply no expensive mysteries in a rental house when you enjoy home maintenance. For example, you used the example of a $1500 burst pipe repair. Coincidentally, this rental house came with THREE burst pipes which I discovered when doing the inspection. We repaired them in 5-10 minutes just in order to test the rest of the plumbing. As part of the renovation, I’ll be replacing most or all of the entire supply piping system with nice clean burst-proof PEX pipes, for only a few hundred dollars in materials and labor.

I could go through the other issues of the management budget and the vacancy rate, but damn, this article is already over 2600 words! So let’s wrap it up with a summary:

Joe has a great point – if you follow his 50% rule, it will lead you to only buy fiercely profitable rental properties, because you’ll insist on getting the property at an incredibly low price.

However, this rule, and its partner the 2% rule, mean you’re looking for a $100,000 house that you can rent for $2,000 per month. Or that my other rental house, worth about $480,000, should be getting me $9600 in rent each month. The $9600 figure is Not Gonna Happen in my town, or even in the entire United States, seeing how you can rent a 4,000 square foot seaside compound in Hawaii for that price. I’ve watched every listing and property sale in my neighborhood for about six years. This particular deal is probably in the top 1% in terms of value for the money, which is why there was such fierce competition from other investors and potential homeowners for the house.

You’re more likely to get these kinds of price-to-rent ratios in very low-price areas (deepest foreclosure-hit neighborhoods in Las Vegas or Florida), or with higher multi-unit buildings. Which is exactly what the Big Time Landlords are suggesting you do!

So why is the MMM approach different? Because it’s a small-time, holistic approach. I’m not interested in owning 10 or 100 rentals, just as I’m not interested in earning $10,000 per month in retirement income, or ever accepting a job that requires sustained car-commuting. I like to do everything in my life myself, or with friends, and I don’t outsource anything. This lowers my peak efficiency in dollars-per hour, but I feel it greatly improves my average efficiency in Laughs Per Day. By learning as many skills as possible, you gain adaptability that pops up throughout the rest of your life in the form of unexpected opportunities, solutions to problems, and ways to save or earn money for yourself and others.

I am interested in going through this project where we will practice a huge variety of skills, from general market research and Landlord Theory (which we’re doing right now), through the various stages of materials shopping, interior design, and renovation, up to the marketing and tenant interviewing process.

Then it’s up to you, if you want to hold out for higher-cashflow houses or apartment buildings, or make a project out of a less-cheap house right in your own area as I’m doing.

My friend and I have over 25 property-years of rental house management experience together, and we’ve been through several dozen successful tenants, as well as an educational number of disastrous ones. Not as many as the Biggerpockets landlords, but enough to know how to continue building our ‘Stash nicely.

So the project goes on – 15 days until closing!


* What’s that photo? No, it’s not the house we’re buying (alas, you can’t get a giant victorian beauty like that for 115k in my town). Just an in-progress shot of the latest vibrant and high-end paint job from my painter friend who is the main investor in this project. Hopefully the little rental house ends up with a similarly cool paint scheme. 


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Let’s Buy a Foreclosure Together! … Episode 1 Tue, 04 Oct 2011 11:56:06 +0000 You and I are about to embark upon an adventure together over the next few months!

Have you ever wondered what is involved in buying a bank-owned home at a massive discount, renovating it back into nice condition, and then selling or renting it out at a highly profitable rate? Well, a friend and I are about to do just that, and I’ll be documenting everything right here on MMM so you can vicariously enjoy and judge our progress while you learn from the Masters.

All of us are well aware that the US housing market has been in a very funky state for several years now. Some people have treated this as source of fear, noting that their own house is now worth less than what they paid for it, and perhaps less than what they owe on it.

Other people (like me) have watched with some fascination as banks have offered up foreclosed homes at ludicrously low prices around their towns, and lucky investors have snapped them up within a day or two. With a wife who is a licensed real estate agent, and being an enthusiastic home builder/renovator myself, I typically run the numbers on each of these houses on the day it goes up for sale, determine how much profit could be made with a reasonable amount of restoration work, then sit back and watch as another investor buys the house and re-sells it a few months later, claiming the profit that I could have had if I had gotten off my own butt.

My excuses so far have been that “I don’t really need to earn more money”, “I don’t want to compromise my family time with a big outside project”, and “I insist on buying all future houses with 100% cash”, because involving a bank, appraiser, insurer, and all of their attendant fees and delays tends to reduce the joy of real estate dealings for me.  By sometime next year, I will have enough uncommitted cash to buy a low-priced home in my neighborhood and do everything my own way without a loan, so that’s what I’ve been waiting for.

But in the mean time, I am missing out on some real FUN. I would love to be part of a big high-speed high-profit renovation project right now. The deals won’t last forever (filings are down 50% from their peak here in Colorado, although it will still take a few years for banks to clear out their backlog). And with the rental market being quite strong these days, it’s a good time to be a landlord.

It is fascinating to me to evaluate an old and junky house, then strategically design some changes that will dramatically improve the feel of the home.”Open up this wall to expand the kitchen, paint the whole interior and exterior in clean and rich historic colors, add a big window here, rebuild this old bathroom, and add a second bathroom over in that back room”. Things like that.

When you take the sale price of some of these bank-dumped homes, and then design a budget for any necessary renovations or restorations (many of them are in pretty scary condition due to months/years of neglect), and compare it to recent sales prices in the same neighborhood, the potential for profit is often huge. My own calculations show profits of $15,000 – $40,000 for a 6-month project, even after paying for the renovations separately. So the investor earns this amount purely for the process of buying, and later re-selling, the house. Alternatively, I’ve calculated about a 15-20% net annual return on investment if you put 20% down on a $115,000 house in my ‘hood, and then rent it out at market rates. (Now you see why Mr. Money Mustache is pretty confident about getting annual returns of 7% on his savings over time – because some of it earns higher rates like this!)

To help get my fix of the house scene, I’ve been helping an investor friend of mine in the neighborhood to find another rental house to add to his collection. We have rushed out and toured several houses on the first day they came to market, and made above-asking-price offers on the same day. But so far, we’ve been outbid every time. It’s because the banks are selling at unnecessarily low prices, and the other investors who are competing with us know it too. Each investor tries to out-guess everyone else by offering more than the asking price, but still enough below the actual market value to ensure a healthy profit margin. We have failed to win this mental lottery so far.

But this week, it looks like we got lucky.

On September 2nd, a bank-owned home came up only three blocks from our own houses. My friend and I both live in a mixed historic neighborhood where the fair market value of houses ranges from $150,000 for an unsightly shack up to perhaps $500,000 for a stately 5-bedroom victorian brick house. Sales have been plodding along steadily since the housing crash – in our area, we never got the mid-2000s boom, and we barely got the subsequent bust. And it is probably the most desirable neighborhood in the city, with limited supply and gradually increasing demand making it one of the most stable housing markets around. Families and stylish hipsters want to buy the houses that are already in nice condition, but only us grungy contractor/investor types are competing for the dumps, which gets us some good deals.

The house in question is above the “shack” level, it could probably be considered a “historic cottage”. It’s about 80 years old, with 2 bedrooms/1 bathroom, 900 square feet, on a really nice large lot with trees, an awesome back deck with hot tub, and a detached 1-car garage facing an alley. Fair market value as assessed by the city: $180,000. Bank asking price: $110,000. Current cosmetic and maintenance condition: Very Shitty.

My friend made a bid on the house at the full $110k. It was rejected by the bank – they had other offers. He raised it to $115k. Still rejected.

Two weeks later, the bank came back to us – the first sale had fallen through as the buyer backed out. We re-iterated the $115k offer — and got it!

This house will generate a hefty profit for my friend – and since I’m investing a portion of the purchase price and doing some of the renovation work – some nice profits for me too. Here is my forecast for how things will work out.

Purchase Price: $115,000
Renovation materials and labor (the place needs a new bathroom and a kitchen upgrade, plus plenty of paint, some roofing, and landscaping): $25,000
Total Cost after upgrades: $140,000

Annual Property taxes and insurance: $1600
Expected annual rent @1100/month:  $13200
Net annual cashflow:  $11600

This is an annual capitalization rate 0f 8.3% after expenses. Quite good for a single family rental house. We’re buying the house with old-fashioned cash, with a portion of it being from me.

Just for comparison, here’s how the numbers would work out for someone buying this house with a traditional 80% loan at 4.5%, rolling in the renovations and additional closing costs that typically come with a loan:

Total Purchase cost: $145,000
Down Payment: $29,000
Amount financed: $116,000

Monthly carrying costs:
Interest: $544  Principal $191 Property Taxes and Insurance: $150
Total payment:  $885
Monthly Cashflow:  $215
Monthly profit including principal paydown:  $406
Annual profit: $4872

Annual return on $29,000 of capital invested: 16.8%!

Note that since both the value of the house and its rental income will on average go up with inflation, this is actually a 16.8% inflation-adjusted return. Of course, you do have to take care of tenants and keep the place occupied and avoid vacancy, but after doing this for many years my friend and I are both comfortable with the trade. On an hourly basis, it is very highly paid work.

This is just the first installment in this dramatic series. The closing date for this sale is October 25th. On that day, we could turn around and re-list the house without any changes for an instant sale at around $140k, but instead we will dig into it and transform it from Zero to Hero in about two months, then find a responsible tenant to move in!

I’ll publish before, during, and after pics and describe some useful projects we’re doing within on a series of MMM articles. We can cover things such as how to re-build a bathroom and a kitchen, how to do your own plumbing, interior design techniques, how to advertise a rental house, and surely many more as we go through the house.

Since this is the Mr. Money Mustache blog, we will be doing it all with an eye for Ultimate Efficiency – creative use of materials and design, using nearly-free supplies from the recycled building materials yard when possible, and a 100% Insourcing model with respect to doing the work.

It will be loads of fun. And it may even inspire some of you who were on the fence, to take the plunge into house-related profits in one way or another. Maybe renovating your own house, or buying your first one, or owning your first rental property.

Update: Here’s a Neat Spreadsheet for analyzing rental house income, emailed by a reader as part of the discussion below. SFH_Rental_Analysis

Next update: October 25th Closing Day!


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