In May of 2016, I purchased my first rental property – a small, 3 bedroom, 1 bathroom house in a town in North Georgia. I purchased it for $43,000 and put, roughly, $15,000 into it to get it up to what I thought were acceptable standards for a modern house.
Once the house closed and I had the key, a friend who had experience remodeling houses, and I went there to look over what all needed to be done. I knew what I thought, but once he gave it a look over, it was a different story…
The wall behind the toilet was soft, easily pushed in when pressed on. The home inspector’s report didn’t mention anything about leaks around the toilet. We crawled under the house into the, luckily, substantially high crawl space and found the joists below the bathroom needed replacing. Also, the floor in the hallway was sagging as someone many years ago had cut the floor joists under the hallway floor to install a floor furnace. We would tackle that after we got the bathroom situated.
It was a real let down. I hadn’t budgeted for such repairs and couldn’t believe the home inspector had missed this. But, I reasoned, that if he had mentioned these inadequacies, I would still be searching for the perfect property that likely didn’t exist. When you buy a $43,000 house, it is going to need work. No doubt about it. I opted to embrace the obstacles at hand.
My trusty friend and I went to Lowe’s (Let’s make things easier and just refer to my friend as “carpenter Ricky”). We walked through the store and he pointed out everything I would need for replacing joists, replacing rotten subflooring and fixing a leak in a wall. I wrote it all down and we agreed to start the following weekend as he didn’t have the necessary tools with him anyway. I went online and ordered everything I would need including, OSB board, plywood, 2x4s 2x10s, 4x4s, pipe fittings, plumbers tape, various types of nails and screws he said he needed, a sledge hammer, and more. I’m sure I’m forgetting something, but you get the idea. We needed a lot of supplies, and would need more. We picked it all up Saturday morning of the following weekend.
First we had to get the 1950s era bathroom floor tile busted up so that we could fully access the joists of my rental property. Busting up tile is fun for a few minutes, the you realize what you’ve gotten yourself into. Next, you think about what would normally be doing on a Saturday afternoon in May. But, the idea here is the end-game and, ultimately, another revenue stream.
Down to the Nitty-Gritty
Over the course of the next few weekends we cut out and replaced joists., taken out and replaced the outrageously-heavy iron tub with a new steel one, and installed new tile throughout the bathroom. With the exception of it needing to be painted, it looked great. With supplies and a “buddy discount” on labor, The remodeling of the bathroom cost about $1500. According to my research this is well below the average cost. I, of course, helped Ricky out as much as I was capable of. I did things like hand him tools, drive nails where he said to, hold wood when he was cutting it, pull out old nails, etc. I ended up installing the new faucet myself, and I got a vanity for $30 off Craigslist that would have been $120 at Home Depot.
The next step was to remove the old, inoperative floor furnace and replace the cut-joists back across the space where the floor furnace was. We would need a jack, cinder blocks and some scraps of 2x4s to complete this project.
On the weekends when carpenter Ricky couldn’t come up to work, I would go up there by myself and do what I could. I cleaned. I installed a new faucet in the kitchen. I removed a bunch of potentially termite luring, old wood from the crawl space, that had been left there by previous owners. I repointed crumbling brick steps, etc.
Eventually carpenter Ricky got another full-time job and, with 3 children, did not have time to help out any more.
Since the bathroom was finished, the sagging hallway floor was rectified and tile put over where the floor furnace used to be, the next steps were to paint, have the original electrical fuse box from the 1950s replaced with a modern breaker box and, then HVAC installed.
Structurally Sound, Now to get up to Code
An old high-school friend who had been down on his luck is who I elected to help me get the place painted. I picked out the colors for the bedrooms, living rooms and kitchen and we purchased the paint supplies at Lowe’s. I should have just hired painters. It took us nearly 2 months to get the place painted to satisfaction and I spent no telling how much gas and lost productivity driving from Atlanta to North Georgia; with the idea in mind that I was saving money because I was doing it myself. My high school friend and I were not skilled painters and we wasted countless hours taping, wiping up drips and splatters, sanding the paneling on the walls in one bedroom and trying to learn how to use the sprayer I bought that I thought would expedite the process.
The painting was done. Next on the agenda for my rental property was to have the electrical system redone; replace the fuse box with a breaker box, upgrade the outside meter, put junction boxes around exposed connections in the attic, and install GFCIs in the kitchen and bathroom. The total came to $3300
To have the HVAC installed was $4800. The house is only 864 square feet, so I went with a ton and a half unit. You don’t want to have a unit that is too big for the house as this can lead to short cycling and, ultimately, condensation and mold problems.
Amongst all the other repairs and installations, I also decided to move the hot water heater that was in a hallway closet to the sort of storage extension that was on the back of the house in order to add to the inside storage space of the house. There was also a leak in the piping under the kitchen that needed attending to. I called a local plumbing company and told them to go by there and take care of it. I was in Atlanta and gave the guy that called the code to the lock box. When I arrived the next weekend, I saw that they had moved the hot water heater and fixed the leak as I’d requested, but they had also replaced all of the galvanized plumbing under the house with modern PVC and, also, replaced the supply lines to the laundry room. I received a bill shortly thereafter for $1400. I’d budgeted about $400 for what I’d requested them to do.
I called the company phone number 4 or 5 times before I got anyone on the phone. They said that their guy must’ve just gotten mixed up.
The hot and cold supply lines for the washing machine definitely did not need to be replaced. It was probably not a bad idea for the old galvanized steel piping to be replaced, but the fact of the matter was that I didn’t have the money to upgrade it and I did not tell them to touch it. So, anytime you have something done and you’re not going to be there, I cannot stress enough how important it is to get what you’re having done and what it’s going to cost in writing.
The lessons I learned on this first property are invaluable. Yes, I think the home inspector purposely omitted critical observations from his inspection, but now I’m glad he did. Had he mentioned in his report at the time that the bathroom wall had a leak somewhere inside and some rotten joists and completely missing joists in the hallway – I likely would have backed out of buying the house. It would have taken way longer to get started on my first rental property, and I wouldn’t already own my second rental property today.
If the house you’re buying is close to your permanent residence, and you have the know-how, it is not a bad idea to do most of the repairs yourself. However, if you live in an area like I do – Atlanta metro – and even the most affordable fixer-upper is still beyond your price range, and thus you must look to a rural area over an hour away for your first rental property, then, please hire someone to handle most of the repairs and painting. All the time driving, figuring out how to do things, gas, and stress is not worth it. You could just pick up a side-hustle on the weekends to supplement the money you’re spending to hire folks that know what they’re doing. But, with that being said though – Get EVERYTHING in writing; what is to be done and a dollar amount that it will not exceed.
This is actually a very condensed summary of the entire process. If I wrote about the experience in its entirety, this post would be, probably over 30 pages long, or more. I now have a tenant living in my house that pays on time and never complains and, most importantly, another source of income.