From my research, the price of my 4 Story Building‘s sales price has decreased. This decrease will allow me to also have a 3 Story Building across the street from 4 Story Building. I would assume that I will have both buildings. And the rentals will be as follows:
3 Story Building
This building has a current tenant on the first floor which is a cookie shoppe. I will assume that they will wish to remain there even if they have to suspend business from 4-6 weeks. This will give me the time I will need to gut and renovate the building. With this, it will allow the cookie shoppe to request some configuration ideas that they might want. They will lose some square footage, as there is no convenient way of getting to the upper floors.
The second floor will be a 1 Bedroom apartment with an office. The office will be ideal if the tenant works from home, or want someplace to address their home affairs (such as budgeting). While they could put a corner desk in their bedroom, if they live alone, it might make sense to make the office the home base for their notebook. It will make even more sense if they had a desktop.
The studio will be a single large room with a full kitchen in place. This is because the shape of the building will make it too hard to add a 1BR apartment, and include an office. The studio will be good for those that need an affordable place to live that would include almost all of the utilities.
- Cookie Shoppe: $2,500+utilities
- 1 Bedroom Apartment: $1,500
- Studio Apartments: $1,250
The total for this building will be $5,250 gross.
4 Story Building
This building will be where I will live. However, I will not take up all of the upper floors – instead I will lease out the second floor as a 2B/1b/1l apartment. This will help give me some more income which will be added to my other sources of income. As with the 3 Story Building, the storefront will be $2,500+utilities. In addition, they will lose some square footage as I will be adding a garage in the back of the building. If this will not be suitable for them, then they may terminate the lease and move to another location without any negative consequence by me.
The second floor will be the apartment mentioned. It will have some nicer features such as paperstone, and the option for a parking space in the garage. This is not available to any other tenant. However, since I am targeting those on Section-8, I would doubt that everyone in this program has an automobile.
The third and fourth floors will be my private residence. This is pretty simple and to the point. Needless to say, I will not charge myself rent, and as with the apartment below me, the utilities will be on a single bill.
- Coffee Shoppe: $2,500+utilities
- 2 Bedroom Apartment: $2,000
- Residence: $0
- Electricity: Solar Panels
- Internet: $250 × 2 = $500
- Telephone: Not Included
- Television: Not Included
- Trash: City Included
- Water: $200 × 2 = $400
- Maintenance: $1,000
- Property Tax: $750
- Insurance: $500
The total for this building will be $4,500. If the second floor tenant needs a garage space, the rent of the garage space will be $250. The space is not guaranteed to the tenant if they don’t have the space now.
Costs
There are a number of costs that I will have to account for. With that said, I will need to consider utilities, property insurance, and taxes. Since I am not renting as an LLC, I don’t need to worry about business licenses. The tenants will call me directly if they have an issue. Keeping all of that in mind, the following will be assumed:
All of this together will cost about $4,000. This will give me a pre-tax gross of $6,650. Assuming 25% for taxes, and the fact that this is in addition to my investment fund, I will think that I would be doing well. To calculate my net income, it will be the following:
100% – 25% = 75%
6,650 × .75 = 5,000
Even without my investment account, this will be a modest income that I can deal with. This will meet all of my needs, and will allow me to have a resource of finances that I could donate to a good cause, or help those that would be less fortunate. Being that I would have been poor more than half of my life, I would have a soft spot for those in my situation. One thing I could do is use this money to save for additional properties that I could buy, gut, renovate, and lease out to Section-8 tenants. Again, I won’t have the portfolio that a realty business will make sense.