Spec/Rehab project in Historic Charlotte, NC area! Six figure profit potential!
Hello to all. I wanted to post my first project on here to show the progress. I am a mechanical engineer with a background in high-end automotive industry flipping cars which to be honest is a lot like real estate just a little more aggressive and dealing with people is different. I am posting this to prove that I can do real estate projects using my Engineering background and anyone can do it with a time and capital.
I wanted to tell my story of a big project I have taken on. I have flipped 2 houses this past year and made roughly 50% return on my investment on each so I guess I know what I am doing ;). I am now ready to go into the next era of real estate investing. Knocking down a house and starting over, or what you would call "Spec" building.
I am going to give all the numbers. BofA just accepted my offer of $208k on a 1953 one story ranch home that is attached to a 2001 year built 2 story 1500 sqft addition. The house is on Cotswold area of Charlotte, NC and is in historic district. The house directly next to it has been bulldozed and someone is currently building a 4,000sqft $800k house. That's very good news to my ears. What I plan on doing is to knock down the ranch to the foundation and build back up with the same foundation size but add a 2nd floor and make a visibly attractive craftsman home. The smallest I can make this property to allow a feasible layout is 4,000 sq ft. Its going to be a big house. 5 bedrooms and a office and bonus room. Local area comps are $225-250 a sqft. I have been quoted by a couple builders at $75/sqft for this project which is really good. Rehab costs $200-250k. List price will be $799k. I see a $250k-300k return on my investment in one flip.... Not bad.
Here is where I am after going to house 9 times in 2 weeks and coming up with more ideas everyday... I think it is pretty solid.
Here are plans:
https://www.dropbox.com/s/58gsfi74w1l7cs9/530%20MCALWAY%208-22.pdf?dl=0
Lets get some opinions from the pros!
Looks awesome man. I wish you luck. I had looked at this one for some of my investors, but they weren't sold on it. We didn't know there was a spec build next door. That will definitely help!
Sounds ambitious...best of luck!
Some thoughts/questions:
- You mention $75/sf from local builders. I've heard that Charlotte is about where Atlanta is in terms of new construction, and we're building there for $60-65/sf (in line with the mid-sized builders), acting as our own GCs and using long-time contractors who we're giving lots of work to. $75/sf sounds optimistic if you're planning to bring in a builder -- I would expect at least $80-90/sf. Not saying you're wrong, just that you might want to verify your numbers and do some reference checks on the builders (ensure they don't have a habit of over-running budgets).
- The $60-65/sf that we're building in Atlanta is for mid-grade finishes. For the higher-end houses we're doing, we're spending closer to $80-90/sf. Is your $800K resale for mid-grade construction or higher-end construction? If higher-end, I think your $75/sf is definitely off.
- You indicate that you'll be building 4000 sf at $75/sf, which puts you at about $300K. Then you say $200-250K in rehab. Just making sure that wasn't a math mistake.
Best of luck and keep us updated!
Originally posted by @J Scott:
Sounds ambitious...best of luck!
Some thoughts/questions:
- You mention $75/sf from local builders. I've heard that Charlotte is about where Atlanta is in terms of new construction, and we're building there for $60-65/sf (in line with the mid-sized builders), acting as our own GCs and using long-time contractors who we're giving lots of work to. $75/sf sounds optimistic if you're planning to bring in a builder -- I would expect at least $80-90/sf. Not saying you're wrong, just that you might want to verify your numbers and do some reference checks on the builders (ensure they don't have a habit of over-running budgets).
- The $60-65/sf that we're building in Atlanta is for mid-grade finishes. For the higher-end houses we're doing, we're spending closer to $80-90/sf. Is your $800K resale for mid-grade construction or higher-end construction? If higher-end, I think your $75/sf is definitely off.
- You indicate that you'll be building 4000 sf at $75/sf, which puts you at about $300K. Then you say $200-250K in rehab. Just making sure that wasn't a math mistake.
Best of luck and keep us updated!
Thanks Scott for responding and giving me your two cents. I see a lot of your posts on here and appreciate it. Yes I believe Atlanta and Charlotte are very close on construction figures. Let me clarify. Upstairs addition will be untouched area as it is already nice. The front house is going to be around 2600 sqft alone x$75/sqft. The $75/sqft is for mid to higher-end finishes. Being a flipper I have some very cheap sources for appliances, fixtures and finishing touches that will put this house into a luxury look for a mid level price point. Another way to save a ton of money is to reuse existing foundation therefore saving $14,000 in demo costs and foundation rebuild costs and permitting etc. The deck, carport, cement pouring, sod/landscaping, etc. etc. will bring it up to $440k total investment. Its a different animal calculating price per sq/ft because of the addition and adapting and reusing material. I believe there is enough cushion(profit) to make me feel good about it.
Originally posted by @Troy Knight:
Looks awesome man. I wish you luck. I had looked at this one for some of my investors, but they weren't sold on it. We didn't know there was a spec build next door. That will definitely help!
It was a nightmare! A tax Lien needed to be settled up etc. etc. but it is finally a done deal. I am sure a lot of people said no way! Diamond in the rough scenario.
Originally posted by @Brendan Mylton:
I believe there is enough cushion(profit) to make me feel good about it.
No doubt...there's lots of room there. I wasn't trying to tear apart the deal in any way, shape or form...just trying to understand the numbers and why they didn't seem to add up in the original post. The fact that you're able to save some of the existing structure makes perfect sense and explains the numbers.
Keep us updated!
Brendan, sounds like you really got your stuff together with this deal and it looks like a cherry. Best of luck with it!
The lower left front of the ranch might need some foundation attention. That big tree nearby might be a contributing factor.
Originally posted by @Steve Babiak:
The lower left front of the ranch might need some foundation attention. That big tree nearby might be a contributing factor.
Thanks Steve for pointing that out. I think your right. The foundation definitely has issues. Once we tear down to the foundation we will get a better understanding of what we are dealing with. I believe builder (cityviewbuilders) mentioned something about having to add some footers underneath and laser leveling the entire thing etc. That tree has to go! Its huge. The roots are probably under the house! I will keep you updated in the next couple months on how this goes and what road blocks I am going to hit.
This is inspiring. I have done 2 flips this year. Picked up a 3rd in south charlotte and looking to close another one this week.. Anyway great post man