Reno’s Done! Did I Get What I Want?
In the last post, I talked about what I was hoping would happen if I converted my basement into a separate unit.
Just under 3 months and $10,000 later, the basement was completed and rented. Did I get what I was hoping for through this project? Let’s see.
In the first post, I mentioned how I was hoping to rent it out for $700 / month. It would increase the overall cash flow of the whole property by about $250 (and get my life cash flow just $200 short of breaking even each month).
I probably could have gotten $700. A lot of my friends said I could probably get $750 – $800. However I settled with $600. Why? A few different thoughts:
I was originally planning to have it done and rented for February 1st. However, it took longer than I guessed (it wasn’t really an educated guess, but more so of a it should be possible). I was also losing motivation to finish it without a hard deadline and so I needed to create something here.
However, showing it without it being done is difficult. With this person, he was willing to rent it without it completely done, and didn’t care for all the final touches.
I’ve been told to leave a month or two’s buffer to find a good tenant. Afterall, tenant selection is the only chance you have in getting a good tenant. After that, it’s almost impossible to get a bad tenant out.
Using that, I figured that if I’m lucky, I’ll find someone for March 1. However, I should plan as if I’d find someone for Apr 1 instead. That would mean the room would sit empty for 7 weeks – losing almost $1400.
However, since I was able to get my current tenant to sign a prorated February, I’m expected to get just over $1000 for those 7 weeks that this place could be sitting idle. Spread over the course of a year, $1000 is like 10 months worth of $100, the difference between $600 and $700.
He didn’t want a year lease. Instead, he was willing to agree to a 10 week notification of termination. Of which, he expects that he’d be moved out before then and will continue to pay rent.
This is an important part for me. Even if I don’t rent it out while it’s still under him, I could get a contractor to go in, make the final touches that I skimmed over, and have it shown and rented for when he does officially move out.
This means no gap between the two tenants and the ability to then justify the $750 – $800.
My old roommate actually recommended him to me and me to him. I got along quite well with my roommate and trusted his judgement. I also know that his friend was working at the same place, meaning a proper job and, to a certain degree, a specific type of personality.
This made it that much easier for me to trust that the basement will not be totaled.
And most realistically, I just wanted closure from this project. I was tired of it. I did not want to do those final touches – I don’t have the patience. I wanted to focus on renting the main floor and starting my journey in finding a job abroad. This was the fastest way to that.
Either way, my cash flow has increased – not to the $250. Maybe closer to $175. But it’s increased regardless.
Increase Home Value
Now this was where I was completely taken off guard. In just over a year and a half I’ve owned this place, the value has gone up over 30%. Moreover, many of the similar homes I’ve seen do not have basements as modern as mine.
If we were to compare my basement before the reno and after, I was probably below market rate prior (hence why I was able to get it on the cheaper end), and now above market rate. I don’t really have any data to work with, but I’ll peg the difference to be about $20,000 (and hopefully, that’s on the conservative side).
So 3 months and $10,000 in materials for a $20,000 increase? Wouldn’t be worth it (that means valuing my time at $3333.33 / month) but…
To Achieve a Future Goal
I wanted to learn how a house works so I can build my own shipping container home in the future. I can proudly say that I am much more confident in making it happen now. Doing everything myself, I can now say I know all the basics required to make a functioning home. As for hidden drawers and maximizing volume? Still to be learned.
Regardless, if I were to reframe this whole thing, I was being paid $3333.33 to learn. I’ll take that anytime!
A Place to Live in the Future
I would be more than happy to live in there in the future. Maybe it’s because I put my sweat and a hint of blood in it. Or maybe it’s because I too, could live without the final touches. Regardless, it’s definitely a place I would be willing to call home… more so than the rest of the house actually…
But it’s funny… during the last 3 months, I’ve had lots of time to think. And right now, I don’t know if I’ll come back to KW after my time abroad. More on that in some other thought piece.
We’re emotional creatures. We do things out of emotions and rationalize it afterwards. The distraction was definitely the underlying reason why this project happened. So did it work? Well, I don’t think much about my previous job anymore and still didn’t take it personally. When it comes to my previous relationship… I’d say so. I’m definitely a lot more at peace with the whole thing, even with all the free time that I’ve had the last week. So all in all, I’m more emotionally stable and view those two back to back events as my next catalyst of growth.
So now that the whole project is done, the next step is to rent out the main floor. But before then, it’s time to recalibrate my life to make sure I’m still walking towards my mission of disrupting the norm and influencing change. How? I’m still figuring that out, but an avenue is going to be through helping people cut their home bills (and help them realize how easy it can be to save money).
Oh, and if you wanted to see more pictures, you can go see my google album.