Rehab #10, Stoneham – Project Financials & Details

5/30/14

I closed on Rehab #10, Stoneham on May 12th. I found this property through an Absentee mailing that I sent out back in February. The seller called me because his boiler died back in October and he didn’t have the money to fix it while paying for the mortgage on another property he owns in NH. He ended up moving to NH and the house has been vacant ever since. He was asking $180,000-$185,000 for the property, which seemed very fair for Stoneham so my acquisitions and marketing coordinator set up a time for all of us to meet at the property. After walking through the house, I could see that the framing was old (the house was built in 1900) and it would take a lot of work to get it up to code. There was also a good deal of deferred maintenance and the first floor would need to be reconfigured. Because of these additional items, I told him the best I could do was $150,000. I gave him a week to think about it and followed up with him. When I called, he was struggling with the price so I came up $5,000 to $155,000. He felt that was fair and we met at the property the following day to sign papers.

This is a 1,400 sf, 3 bed, 1 bath Old-Style house. One unique aspect is that the driveway is in the back of the house and requires driving around to another street to park in the back yard. I think this will play into the resale a bit, however, I’m not too concerned because the house next door has the same and sold quickly. Also, one of the neighbors’ property lines is very close to this house and they are using some of our land as their own. I’m planning to put up a fence but I’m expecting it will ruffle some feathers considering it will reduce their yard space which is already very small.

A private lender is funding 100% of the purchase and rehab costs for this deal. Projected rehab costs are around $100k which includes a contingency factor. I’m hoping that actual costs will come in closer to $85k-90k but we all know how something always comes up in every rehab. My projected ARV is $350,000 but another investor recently sold a similar property a couple streets away for $375,000 so our number is a bit conservative. Because we obtained this deal through my marketing, I will have my wife list the property. Here’s how the financials break down on this deal.

Notable rehab items for this property include rearranging the first floor to make it more usable and open-concept, adding a half bath and a laundry room on the first floor to satisfy buyers’ needs. The house also needs some resupporting in the basement and roof as the framing is mostly 30“ on center (building code is 16” on center). A new roof will be installed and there is a small dog shed roof on the back which needs to be reframed. A new FHA heating and central ac system, as well as all new plumbing will be installed. The second floor layout will stay as-is but we’ll need to replaster most walls and gut the bathroom. Finally, we are replacing all windows, doors and trim to give the house an updated feel.

Front View

Back View

Front Room

Kitchen (from Front Room)

Kitchen (from Dining Room)

Dining Room

Stairs

Bedroom

Basement