2 Bedroom Turned 3 Bedroom Single Family Rental Interior Update - Birmingham, AL 35217

This was a small 1,026 SQFT home I offered 40,000 on after inspection, ended up closing a few days after at 40,000 and the rehab begun. It was originally a 2 bed 1 bath, however we were able to convert to a 3 bed 1 bath as there was a nice sized den. We added a closet and door to meet section 8 standards for a bedroom.

Rehab Needed To Meet Section 8 Standards:

• Entire home repainted, including all walls, ceilings, and trim work
  

• New carpet laid in all living areas and bedrooms + new flooring installed in kitchen and bathroom + new subfloor and disposal of old subfloor
  

• New toilet, vanity, tub installed
  

• Trash removal from interior and exterior
  

• Drywall work on multiple ceiling areas and walls
  

• New interior doors installed throughout home
  

• Update all electrical outlets to fit electrical standards of section 8 inspection, addition of 2prong and 3prong outlets where necessary, and removal/disposal of outlets that are ungrounded as well as GFI outlets installed in all areas needed
  

• Installation of smoke detectors and carbon monoxide detectors necessary throughout home to pass section 8 inspection
  

• Installation of new light fixtures in home, and removal/disposal or current fixtures as well as all ceiling fans currently present
  

• New locks to be installed in all doors
  

• Home to be thoroughly updated to meet all guidelines necessary to pass section 8 inspection
  

• New floor in laundry room
  

• Vine removal from exterior
  

• Build wall in rear den and install door to create 3rd bedroom

• Build closet in bedroom 3

• Install door in laundry room

Total Bid: 45,000

Rehab Begins (11/2/2023):

(Need to edit photo in)

Rehab Complete (12/18/2023):

After about a month the entire house had been re done inside and the outside was cleaned up and pressure washed.

Numbers:

Initial Cost:

Purchase price: 40,000

Rehab cost: 45,000

Closing costs: 1,164

Total: 86,164

Monthly Income:

Monthly rent: 1,238 (100% Covered by HUD)

Property management: -123 (10%)

Property insurance: -134 (1,608 annually) (Premium needs to be reduced as it's not vacant)

Property taxes: -98 (1,186 annually)

Total: 883

**Does NOT include debt payments**

Summary: Initial cost: 86,164

Net annual cashflow: 10,596

Annualized cash on cash return: 12%

**Note: the numbers detailed here are missing a few costs such as utilities cost during rehab, property management new tenant leasing fee and appliances for the unit.