Turn that Single Family House Into a Cash Cow

Published: 09th September 2011
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Learn the secret to getting maximum money with minimum work

You know I’m a big fan of multi-unit properties. There’s a good reason – more units equals more cash flow. If one tenant in a four-plex moves out, your cash flow goes down 25%. But if your tenant in a single family home moves out, your cash flow goes down 100% --- all the way down to zero.

Of course, many sellers recognize this, so multi-unit properties often cost more than single family homes. But here’s an interesting twist you may not have thought of: what if you could turn a single family home into a multi-unit property? I’m here to tell you that you can – and you should.

Early in my real estate investing career, I did this a lot – and reaped serious profit doing it. It’s a great way to generate a lot of positive cash flow in a short period of time. And it takes very little work on your part.

Here’s how: simply buy a single family home, and convert it into a rooming house, or what real estate people often call an SRO (single room occupancy). With the right property, you can easily create separate rooms for five or six tenants in one house – and that means collecting five or six rents each month. If you find the right neighborhood, and the right house, this can be a very simple and lucrative addition to your portfolio.

Here’s some tips:

1) Find the right neighborhood: Look for neighborhoods that are low to moderate income, and already have a mix of single family, multifamily and commercial properties. You’ll want to check the zoning, but in this kind of neighborhood it’s usually not difficult to get the zoning changed to multifamily if you have to. (You’ll want to make the zoning change a contingency in your offer, just in case.) Neighborhoods near colleges and universities work well, too.

2) Find the right property: The best property has four bedrooms and at least one bathroom upstairs, and room downstairs to create at least one or two more bedrooms by putting up a few simple walls. Another bathroom downstairs is a bonus. Just as with other properties, look for cosmetically distressed properties, but walk away from any major structural issues.

3) Make the right improvements: First, find out what the local ordinances say about SROs – the tenant to bathroom ratio, for example, and requirements about windows in bedrooms. Each municipality has its own rules, but they’re usually pretty easy to accommodate for little money. Leave one room downstairs as common living space, and put up walls to turn the other downstairs living spaces into individual bedrooms.

One other improvement you have to make is furniture: tenants expect SRO rooms to come furnished. But we’re not talking anything fancy – a double bed, a bedside table, a lamp, a chest of drawers, and a mirror. If there’s enough room, add a chair. You can find these things at secondhand stores and yard sales – or negotiate a bulk deal with a furniture store to furnish all the rooms at once.

You see how easy it can be to buy a distressed single family home and turn it into a multi-unit cash cow. You generate a bunch of positive cash flow, and you provide a clean, safe place to live that low income people can afford. It’s good for everybody – and it’s especially good for beginning investors working toward their financial independence.

Russ Whitney story is proof in becoming financially independent or build a nest egg so you can enjoy your retirement years.If you want to learn first hand from Russ Whitney. Visit us at: http://russwhitney.com/

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