Cash Flow Positive Rental Within 72 Hours

The nervousness of purchasing another piece of real estate in this climate quickly subsided after we closed on the property purchase on a Wednesday and then had a lease signed and started by Saturday.

Closing was pretty routine as this was my 4th closing and felt comfortable quickly signing the closing documents without much detailed review. Two hours later we were at the house showing it to prospective tenants and making some final minor improvements to the house so we could rent it out. One of those tenants was interested and we took 24 hours to screen them. 48 hours later we had the lease signed and received the initial deposit/rent. The next day the lease started.

We will see if everything works out ok with the tenant, but we initially feel good despite how fast we rented it (I believe its better if possible to spread out the showing/lease signing/lease start to shake out any potential issues). It felt really good having the property rented so quickly and put some of our concerns about making such an investment in this environment at ease.

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Comments (10)

Wow... that's fast. I'm closing on my 9th property in a couple weeks and, like many of the others I've purchases, there's so much that needs to be done to it before I can rent it. Did you luck out and buy a house in good condition or are there other tricks to the quick turnaround?

For example, the house I am buying needs
1) new back door
2) minor repairs to the walls and new paint throughout
3) new carpet
4) thorough cleaning
5) new appliances
6) various other repairs

Posted by My Frugal Miser | August 27, 2011 8:25 PM

Yes the house was updated by the sellers so they could sell it. We needed to purchase new appliances and had about a days worth of repairs/updates to make pre-rental, and then a longer list of items that we could get done after the tenant moved in.

Posted by 2million | August 28, 2011 7:46 AM

Congrats on getting it rented so quickly. I would suspect that there are many potential renters due to the number of foreclosures.

Posted by cashflowmantra | August 28, 2011 7:47 AM

Congrats on getting rented so soon. Like miser, I just closed on a property that will need repairs but will be very cash flow positive.

Here's hoping I can join you in the land of milk and honey!

Posted by Zann | August 28, 2011 8:09 PM

Great blog. I too am actively looking to purchase rental property and one of my biggest fears is getting the rehab costs estimated correctly before closing. Is that just something that you pick up as you go along or is there something you might recommend?

Posted by Neiuw | August 29, 2011 5:14 PM

Neiuw,
I have only bought rentals with only minor fix up required - and understand the concern on estimating rehab costs. I think that is something that really comes with experience - so my advice would be to start small/minor rehab and work your way up as you become successful.

Posted by 2million | August 30, 2011 8:14 AM

how did you screen your prospective tenant? what steps did you take?

Posted by rags2riches | September 1, 2011 4:48 PM

In your net worth calculations you always list your properties at the same value as when you first purchased them. Was that an intentional decision? I'm starting to track my net worth and realized that the assesed value of my house is significantly less than when I purchased it. Do you think your value has not changed, or do you just not factor that into your net worth calculations?

Thanks. Love the site.

Posted by E | September 7, 2011 5:52 PM

Its very intential -- I have always listed properties at their cost basis. When properties were gaining ground during the real estate boom I din't increase their value and now during the decline I am not reducing their value either. Real estate is illiquid by definition which means its hard to estimate its real value. I believe the cost basis is the best way to value the property and over time Im confident the cost basis will prove to be a conservative estimate of their value.

As another data point here are the current (as of 8/2011) Zillow values for our 4 properties: #1 $191,500, #2 $113,800, #3 $288,200, #4 $222,900.

Posted by 2million | September 7, 2011 6:51 PM

Do you use a renter screening service? We are looking to rent out a place and wondering if you can recommend one.

Thanks!

Posted by Mark | September 12, 2011 2:21 PM