3 Turned 4 Bedroom Single Family House - Bessemer, AL 35020

The first one! This 1,160 square foot 3 bedroom (now 4 bedroom) house was listed for sale at 60,000. Initially I came in with an offer at 40,000 contingent with an inspection. After the inspection due to the amount of work needed, came back at 35,000 and closed.

Pre rehab pictures for context:

EXTENSIVE interior and exterior rehab was needed:

- 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 HVAC unit installed (heating + cooling) + cage built to protect unit

- Trash removal from interior and exterior

- Drywall work on multiple ceiling areas and walls

- Current roof removed and disposed of, new asphalt paper, decking, and

shingles installed for 25 year roof + new soffits and fascia board

- Update all electrical outlets to fit electrical standards of section 8

inspection, addition of 2prong + 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

- Entire house re-sided with vinyl siding

- Railing installed on home exterior

- New cement steps poured at entrance

- Rear porch removed and new steps built

- New ceiling built in living room where it has collapsed

- New tub installed in bathroom

- All kitchen cabinets painted

Total Bid: 75,000

Rehab Begins (7/22/2023):

The rehab on this property came in a lot worse then expected, with large portions of the roof being rotted through and having to be replaced. The initial time estimate for this project was around 4 weeks which I thought was pretty nuts.

The first week the old roof was disposed of and the new roof was put up, along with the interior ceilings being redone and drywall. Second and third week the house was re sided and the inside was renovated and we were able to add in an extra bedroom to convert this 3 bedroom house into a 4 bedroom house.

Fourth week new carpet was laid down and all the little things got cleaned up and it was just about ready for a professional cleaning and photos.

The Result!

A beautiful small 4 bedroom house that's unrecognizable from that blue house I bought just about 4 weeks ago!

Numbers:

Initial Cost:

Purchase price: 35,000

Rehab cost: 75,000

Closing costs: 1,574

Total: 111,574

Monthly Income:

Monthly rent: 1,302 (100% paid by HUD, guaranteed every month)

Property management: -130 (10%)

Property insurance: -121 (1,457 annually)

Property taxes: -19 (237 annually)

Total: 1,032

**Does NOT include debt payments**

Summary: Initial cost: 111,574

Net annual rent: 12,384

Annualized cash on cash return: 11%

**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.