House #2 Under Contract To Buy, More Info

I went under contract to purchase House #2 back in Early September. The negotiations took longer than I would have liked due to: 1. It’s a Fannie Mae owned property, and 2. The long holiday weekend. I’m paying a little more than I had planned because competition is still high and FNMA gave little ground in the negotiations. However, I can still make it profitable if I can stick to the budget and get work done at good prices.

 

This house is located pretty close to House #1 so I already know the area and have a good idea of what this one should sell for.  Unfortunately, it will need a good bit more work than House #1.

Oh yeah, about the name.  My realtor and I had lunch at Del Taco before we drove up to see this property for the first time.  While we were at the house, let’s just say the Mexican food started kicing in for my realtor and a crisis situation was looming.  There was no public restroom close enough to make it.  However, the stars happened to align for us though as 2 crucial things came together.  1.  The house had running water and electricity.   2.  I happened to have an emergency roll of paper in my trunk.   The day was saved!

Closing is set for October 12th.



The purchase price on this house is $66,000,. but after closing costs the true cost will be around $70-71K.  This is more than I hoped to spend on the house, but inventory is still low and I’m confident I can make the deal profitable.  I expect the house to sell for $105-114K after it’s rehabbed.  If I can sell at $110K and I can keep the renovation budget under $16,000 then I should clear a little over $11,000 on the deal.  If I have to sell for less, then I’ll probably try to save a little by not furnishing the new refrigerator, washer and dryer. 

On the exterior, I’ll have the side gate fixed, remove the large holly bush that’s overtaking the steps, paint the front steps/rails, repair and stain the rear deck, repair and paint all damaged window trim, Install new front door, repair and paint the garage doors.  If the budget allows, I’ll repaint the entire exterior.

On the interior, I’ll have to fix/replace a few of the failed large windows.  I’ll put in ceramic tile at the front entry, new carpet and vinyl flooring throughout.  I’ll also put in all new appliances, all new light and water fixtures, and new door and cabinet hardware

In the Master bathroom, I want to replace the single vanity with a double, remove the laundry chute and shelves, and place a stand-up shower unit there.

The lower level will require most of the work on this project.  I’ll be finishing out the entire level, adding a den/living area, a fourth bedroom and another full bath.  I’ll also add a door to create a storage area in front of the air ducts seen in the before pictures.  The laundry chute will be removed and that wall will be bumped out to create a closet in the adjoining room so we can call it a bedroom.  Currently there is a fiberboard material (similar to what is frequently used on the backside of entertainment centers and dressers) so that will all have to come down.  I’ll then insulate all of the walls and finish with sheetrock for the walls and ceilings.

The small closet area (shown here just to the left of the door) will be removed and the area will be framed out larger for placement of the full bathroom.  The air duct going towards the window will also be re-routed to accommodate the flat drywall ceiling.  We will also widen the doorway between the living area pictured here and the laundry area which is located to the right, and make it into an open area. 

We’ll close off the laundry area with some bifold doors and finish off the walls and ceiling throughout the area.