Round Rock Rental Project aka THE ROCK
Hey house hunters. So many fun real estate things happening!
In December, my uncle, my mom and I bought a rental property in Round Rock, TX. Round Rock is a small, but growing, city 25 minutes north of Austin (some would say a suburb of Austin - but I'm staying away from that dirty word, suburban). Our property is a quarter acre, with two separate units, about three blocks from downtown Round Rock.
YALL. This house was so weird. I don't think the photos properly show the weirdness. The house reeked of cigarette smoke, which is ideal for a real estate investor. No central air, which was the biggest draw back for me. HOWEVER, there was a perfect 1 bedroom back unit ($$$), a huge, beautiful yard and it sat on a cul de sac. Super rentable! Although I didn't know the Round Rock rental market as well as I know the Austin one, I went for it. TWO UNITS WITH CURB APPEAL? I'll take it.
My mom, my 18 year old sister, my mom's girlfriend and my boyfriend all chipped in on light renovation. It didn't need much, but we did a lot in 5 days. We slept on air mattresses in the CRISP December Texas cold. We laughed, worked, froze and fought a little bit. I call it the renovation morale cycle.
originally listed for $349,500
after months on the market, sellers gradually dropped the list price to $225,000
3/1.5 main house, 1/1 back house
we offered $200,000 - they signed the contract right away
we got a conventional loan and put $20,000 down
I used my realtor commission to pay for the closing cot
we split the down payment and renovation costs 3 ways, which means we'll split the profit 3 ways
we got the sellers to pay for an exterior paint job (makes such a huge difference!)
we did all the labor ourselves, paying someone to do these things would have cost A LOT more
we replaced the countertops
we tiled the backsplash with amazing hexagonal craigslisted tile
we installed wood laminate flooring in a 400 sq ft room (UGH)
we painted every room
we installed a sliding glass door where there was once just windows
we installed washer/dryer
we painted the lower cabinets
we fixed some minor plumbing issues
two rooms had missing ceiling coverage (?) we recovered them
we installed a door where there wasn't one (we got creative with spaces to rent!)
Total renovation costs: $3,236
approach to finding tenants
YALL - renting by the room is where it's at.
I use Craigslist to avoid having to pay real estate agents to find tenants for me, which lowers holding costs. We bought the house in December, so the first mortgage payment wasn't due until February. My goal was to get it rented by Jan 5 as to bulk up our reserve and have enough money in the joint account to pay the mortgage in February with a cushion. We were definitely renting in an off-season (winter), but I listed the whole house in every way possible. QUAINT FARM HOUSE 3/1.5, WALK TO DOWNTOWN ROUND ROCK, HUGE YARD $1500 (note, $500 per room). I had VERY few responses, and the responses I did get were low quality leads, or wanted to rent starting in April.
I decided to list the house by the room. $540 for a room with a shared bathroom, $600 for a room with its own bathroom and $695 for a sweet 400 sq ft flex space that we turned into a studio of sorts. MY PHONE WOULD NOT STOP RINGING. Deposit was same as rent, which is super affordable for people who don't want to spend a whole $2,500 on moving into a new place. Tenants were all in by mid-Jan and we were set for when our mortgage was due on Feb 1.
Before/Progress photos - note that only cosmetic fixes were necessary, but also note that you can't smell these photos. It was cigarette smoke city.
After photos - note that we didn't go all out. We want it to be functional and safe, but not tooooo fancy. It's a rental!
Monthly mortgage, interest, taxes, insurance: $1455
We pay utilities due to our renting the main house by the room, which come out to be about $200/month
Total monthly rent charged: $2715
I rented each room for a fair price and I got a huge reception from the craigslist ad. It yields a much higher monthly income than renting out the whole house. It's a little heavier lifting up front, but definitely pays for itself over time
Total monthly cashflow: $1060
This is not your typical cashflow! Investors usually shoot for $200 per door, so we are out-performing quite a bit. Hustling pays yall. Happy house hunting!