In 2012, I paid $3,0000 for a fixer-upper that turned out be more of learning experience than anything else. In hindsight, I wish I had never bought it, but I did, and just had to deal with all of the problems that came with it. Yesterday I sold this house for $37,500 and I feel relieved to have this monkey off my back.

Not that it really matters, but I will provide my 'numbers' here and maybe someone can tell me if the 'show was worth the price of admission',...LOL.

2012: Paid $3,000.00 cash

Improvements: $18,000.00

My Cost Basis: $21,000.00

7 years of Depreciation: $5,000.00

Adjusted Cost Basis: $16,000.00

Total Rents (7 years) : $44,000.00

Closing Costs: $2,500.00

Capital Gains Tax: $3,000.00

Roy let me be one of the first. YOUR a looser!!!!!

Your cups always half full and the instructions on how to empty are under it.

Myob,

The primary reason I put this house up for sale was the crummy neighborhood. This hood is 100% white trash. I could fix the house (I did) but I could not fix the neighborhood.

I like how you got $44k out of it before you cut it loose! :)

Deanna,

You are correct, $32K after the tax man gets his share.

Roy cry me a river!!!!! At least al the way tot he bank.

Those neighborhoods are gold mines as you have demonstrated. Maybe not for the old at heart-- but profit centers.

So let me get you more cheese to go with that whine?

Deanne notice how he skimmed over the 44K? Roy maybe had you put that 44K toward more of the fixer uppers you'd be crying about only 100K profit.

Myob,

Skimming? You mean like 'milking the cash cow here'? This house was a cash cow but it was also a bum magnet. My last tenant was a Section 8 ($675/month) and she trashed it after 1 year. I booted her out just so I could sell the house.

Congrats, Roy!

I think any time you can make money vs. lose it in this game you've done the right thing. As you said, you learned a lot from this house. Often, "learning" = loss of money. So you did well, especially if that was one of your first "Roy houses".

If my math is right, you cleared about $11,500 on the sale of this beauty after cap gain taxes, plus you have your rent profits. Not too shabby, my friend.

Money is good. A peaceful life may be better.

As has been said, most of us lost money if we say it was a "learning experience". You still made money in the process - so GOOD JOB!!

Only you will ever know if it was worth it to you.

I can't get over being able to take $5K depreciation on a place that cost $3K.

DJ,

Roy, I feel your pain on the Depreciation Recapture. That said, I take the good with the bad. The fact is if we are doing our part to maintain our buildings (and I know you do!), they are NOT going down in value, but the IRS allows us to claim a paper loss as if they were.

This is why I have stated and will continue to state that depreciation is a TAX concept with no basis in reality. So if you have to sell a few and take the hit...take it, knowing that you're still shielding other income with the remaining properties.

I think you can get out of the depreciation recapture if you hold your properties in a self-directed ROTH IRA? Maybe Brad 20K or Mike Todd could confirm for us.

I notice that you didn't add anything in there for the value of the education. That has to be worth a nice bit.

$18,000 in improvements is a lot of money to put into a house that only sells for $37,000 seven years later. Still, you did fine with it.

Roy it seems to me that several people help pay for your education on what to do & more importantly what not to do when buy, renting & selling property. Since acquiring, rehabbing, renting & now selling this property, I'm sure you've been able to apply this knowledge to your other purchases.

Ya got a lot of mileage (bragging rights)

I have 17 rental houses left now. I have 5 houses that are worth at least $60,000 each but that is only because the Class C neighborhoods are better. The house I just sold was in a Class C hood that was slowly sliding into a Class D hood. I saw the writing on the wall when someone bought the vacant lot across the street and moved a junky looking MH on it. This is what southern rednecks do.

@ Beth: Not all of my houses were bought at $5K. $5K-$15K would be my average purchase price over the last 13 years. The most I have ever paid was $35K but that house was in MINT condition and located in a good quality Class C+ hood.

$3k purchase price?!!!

I want to see a picture of a house that cheap.

Sean,

There is problem with my Mr. LL picture page. It will not allow me to Login. I do have a photo to show you.

LOL - Deanna, thanks but we have a selfie stick. Just gotta watch that last steppppppp...

GO Roy!

$37500 on a $21000 investment. Nice.

Taxes are always with us.

Time to learn how to do this inside your Roth 401K where there are NO taxes to pay!

maybe not the juiciest of plums, but a plum just the same. my pops once told me "you never go broke taking profits".