Bought a 5 bed for $19k under ask because I pulled the room comps myself, then spent $11,400 on a third bathroom

Seller had a 5 bed 2 bath, about 2,300 square feet, ten minutes from a commuter rail stop in a mid size metro. Listed at $287k. His whole pitch was a one page sheet showing five rooms at $850, so $4,250 a month gross, and a cap rate calculated off that.

I spent two weekends pulling every filled room listing within three miles. Rooms sharing a hall bath were going at $700 to $780. The $850 listings were the ones with a private bath or an ensuite, and they were sitting. I built the file with screenshots and dates, sent it with my offer at $262k, and we closed at $268k. He had a second buyer who took the $850 sheet at face value and their lender's appraisal problem killed it, which is why I got a second bite.

Then the part that nearly broke it. Five rooms on two baths is a fight. I converted an oversized laundry room into a third full bath, $11,400 all in, and the permit sat three weeks longer than the contractor said it would. That was three weeks of carry with no rent, roughly $1,900 including the utilities I was already paying to keep the place warm and dry.

Lease up: five rooms in 31 days, average $748, so $3,740 gross. Cleaner biweekly $220, utilities averaging $415, lawn $90, insurance and taxes I'll leave out since they're local. I self manage. Net has run around $1,650 a month on about $66k in.

What I'd keep: pulling filled room comps myself instead of taking a rent roll pitch, and never going above two rooms per bathroom.

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1brandonlee36Passive

The bathroom is the whole post. What happens if the laundry room hadn't been big enough, or the plumbing stack was on the wrong wall and the bid comes back $28k? You're at five rooms on two baths, and my experience there is you don't lose the rent, you lose the tenure. People stay eight months instead of eighteen and you pay for it in turns.

Which is the number I'd push on. You've got 31 days to fill five rooms in a market you clearly read well, but you're one year in. My four room house has averaged 2.7 turns a year and each one costs me about $340 in cleaning and paint touch up plus 12 to 20 days empty. At your rents that's roughly $2,900 a year of the $19,800 you net. Your $1,650 a month is probably $1,400 once a normal turn year lands on it.

Still a good buy. I'd just want to see year three before I called the third bath the reason.

Bought a 5 bed for $19k under ask because I pulled the room comps myself, then spent $11,400 on a third bathroom

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