1st Investment Property. Corpus Christi, TX

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1st Investment Property. Corpus Christi, TX

Thomas B.
Member since 2020 · 37 posts · 11 votes

I just closed on my 1st investment property! It was listed as a 3/1 foreclosure; however when I walked the property with my agent it looks like a 2/1 with a single car garage attached by a breezeway that had previously been converted to a 1/1. in the back of the property there is a huge 2 car garage that also has a 1/1 apartment in the back of it. Three units for the price of one! 

I paid $99.9K cash (using a HELOC from my primary home) and plan to finance the renovation with a TSP (401K) Loan. It is very close to public transit and local schools and shopping but a lower income blue collar neighborhood. Plan to rent through Section 8. According to the SAFMR for the zip code, I should bring in $2840 in rent between all 3 units and $575 net after all expenses paid.

I have budgeted $50K for renovations but since this is my 1st time, I am not sure how realistic this is. I know it needs considerable foundation repair, it has wooden double hung windows with several broken panes and badly peeled paint on the trim. The exterior has a stone/ brick veneer that is in decent shape, other than the numerous cracks from the foundation sinking. The roof is in unknown condition. It is very low pitched, so it shouldn't be too expensive to replace with TPO or Spray Foam Roofing, like the commercial buildings. 

We'll know more after the Home Inspection on the 27th.  

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  • Thomas B.
    OP
    Member since 2020 · 37 posts · 11 votes
    4y

    One of the guys in our church owns one of the biggest foundation companies in town and quoted 35 piers around the perimeter to stabilize the slab foundation for a total of $10900. 

    I had a random guy that Angie's List sent my way quote $10K for a "torch-down" roof including haul off. It seems high to me but I am a noob. He did say he can start immediately though. 

    I haven't had anyone else give quotes yet. All of the GC's I have contacted said they are not taking any more jobs due to booked schedules or supply chain lag. 

    Assuming these quotes are on-par with the market, that leaves me 29K for electric, plumbing, windows (maybe), and interior. 

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y

    Congratulations on the purchase! Keep us updated on how it's progressing.

    The DIY Landlord Book4.7248 Reviews
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    0Reply
  • Vanessa Ursery
    Realtor · Corpus Christi · Member since 2019 · 39 posts · 10 votes
    4y

    Let me know how It goes. I'm in corpus too.

    0Reply
  • Thomas B.
    OP
    Member since 2020 · 37 posts · 11 votes
    4y

    Foundation is getting underway today. 30 piers all around the perimeter to stabilize the slab and then level it as much as possible without causing too much further damage. I had a quote for $10.9K but he wasn't available for another few weeks. Another quote came in at $11.5K but he can start today! Everything is pending foundation work, so sooner is better than later. 

    I have had several quotes on the roof. All right around $10K for a torch-down roof. The company that was going to quote for the Spray-Foam roofing was a no-show but I am very interested in the product.

    The window company said they needed foundation work complete before giving an accurate quote, since the openings shift, changing the measurements. 28 windows... ouch!

    I am also looking at the electrical, likely needing the service upgraded from a 100 amp to 200 amp service and install sub panels for the 2 garage apartments.  Depending on cost, I may do the remainder of the wiring from there. None of the outlets have grounds installed and no GFI outlets in bathrooms or kitchen. Outlets and Lighting Fixtures I can handle myself as well as pulling wire. I wire helicopters for the Army for a living. 

    Looking at the 2 car garage apartment (1/1) it will need gutted down to the studs, since it has had water intrusion. Mold/ mildew on the walls, etc. Since it will be down to the studs, how much more would it be to just start from scratch and convert the entire 2 Car Garage into a 2 Bedroom unit? The existing 1/1 apartment is very small. Section 8 does pay by the room. It would be the difference of $ 1080 for a 2 bedroom vs $880 for a 1 bedroom.  Assuming I can keep the reno budget under $50K, that should cashflow just shy of $700 per month.  I figure 2/1 would be in higher demand than a 1/1 for Section 8 anyway. Mainly single moms etc. 

    0Reply
  • David Ray Norris Jr.
    Member since 2019 · 42 posts · 16 votes
    4y

    Great find and good luck with the reno! Thanks for posting your progress, looking forward to more updates hopefully. If you need a hand with anything I'm in Corpus as well. 

    0Reply
  • Thomas B.
    OP
    Member since 2020 · 37 posts · 11 votes
    4y

    Had several quotes for the foundation but USA Foundation Repair really worked for my business! He initially said he was a couple of weeks out before being able to start; however, he came back later that afternoon and told me his schedule opened up and he could start the next day! I came out yesterday after work and all 30 holes were dug and he was already driving pilings. Very impressed! Depending if weather holds out it should be done late today or early tomorrow. 

    Also had tree crew come out to get a giant Ash tree a trim to get branches off roof and away from eaves a little pricey but they were certified arborists. I got shafted before, paying out the nose to have a big shade tree in my own back yard "lifted", only to have it completely butchered, requiring a complete removal a couple years later and now my back yard and back side of my house is blistered by the afternoon sun. 

    With the Ash Tree trimmed, I can start roofing and once the foundation is done, plumbers and electrical can start. 

    0Reply
  • David Ray Norris Jr.
    Member since 2019 · 42 posts · 16 votes
    4y

    Which tree trimming company did you use?

    0Reply
  • Thomas B.
    OP
    Member since 2020 · 37 posts · 11 votes
    4y

    The roof is done and I had another friend from our church take care of the plumbing, repairing the water and gas service up to the house which had broken underground due to the sinking foundation. Between the roof, plumbing, and foundation, I am nearly half way through my reno budget! 

    I have not been able to get an electrician out to give a quote! Seriously?!? It's like pulling teeth from a chicken! Why can't a business owner actually schedule an appointment and keep it? I'm not sure if it is the local culture or if this is common elsewhere among trades-people. 

    I have also been pulling out my hair trying to figure out code/ permitting/ legal requirements for replacing windows and doors. I have 5 exterior doors to replace and want impact-rated steel since there have been multiple forced-entries in this house's past. The sales girl at the store said I'd need a TDI (Windstorm) Inspector sign off on the installation. After much wrangling with them, I learned my particular door was certified by TDI but only if it is installed in Southern-Yellow Pine framing, not Douglas Fir. Long story short, I need a structural engineer to approve the installation since my framing uses a different wood species. 

    Trying to not spend more than I have to, I need to get everything measured out and spec-out the exact door and any windows I am replacing to send to the engineering firm as a package so they can have everything drawn up, only needing to charge me for a single visit. 

    City Permitting and my Insurance company also need engineering approval on all the repair I will be making. It is frustrating going through all this trouble; however, I have seen so many hack-job handyman home repairs over the years it is understandable to want regulatory oversight.  

    0Reply
  • Thomas B.
    OP
    Member since 2020 · 37 posts · 11 votes
    4y

    Removed drywall from exterior walls to gain access for plumbing & electrical and insulate since there was none previously. Drywall was all cracked up anyway from foundation issues. 

    Plumbing should be finished by the end of the week. 

    I've had a couple electricians come out to "give estimates" ; however, I have only heard back from one after hounding him for a response after radio-silence for a month. He said they were not able (or willing) to do the rewire due to current work load and staffing shortage! I asked him for a rough, ball-park figure and he said $30K!!! 

    I understand prices are going up but for a single-story house under 2000 sf, with drywall already opened up, that seems astronomical. If electricians were getting that kind of money, I'd think everyone and their mother would be trying to get in on it. I know people who don't earn $30K in a year. 

    One of my co-workers does rewires on the side. He is an aircraft electrician by trade. He does it after work and over the week end with a helper. He quoted me $12K but said he doesn't fool around with permitting or inspections. I think this is a cultural norm for the area... 

    Does $12K sound reasonable for a rewire? Should I let him do the bulk of the work and handle dealing with the Inspector myself?

    Can anyone recommend an electrician in the Corpus Christi, TX area?
     

    0Reply
  • Thomas B.
    OP
    Member since 2020 · 37 posts · 11 votes
    4y

    I want to get at least the 2/1 unit listed for rent by Thanksgiving. 

    0Reply
  • Vanessa Ursery
    Realtor · Corpus Christi · Member since 2019 · 39 posts · 10 votes
    4y

    Primary Electrical Solutions

    361-994-0099

    Try them. 

    0Reply
  • Thomas B.
    OP
    Member since 2020 · 37 posts · 11 votes
    3y
    Quote from @Vanessa Ursery:

    Primary Electrical Solutions

    Try them.  

    Thanks, Vanessa. 

    That's who gave me the "ball-park" $30K guestimate. He did say it was just a guess and I don't think they got as far as actually calculating how much wire they'd need or doing load-demand calculations, so that number might be way of base... hopefully.  

    0Reply
  • Vanessa Ursery
    Realtor · Corpus Christi · Member since 2019 · 39 posts · 10 votes
    3y
    Quote from @Thomas B.:
    Quote from @Vanessa Ursery:

    Primary Electrical Solutions

    Try them.  

    Thanks, Vanessa. 

    That's who gave me the "ball-park" $30K guestimate. He did say it was just a guess and I don't think they got as far as actually calculating how much wire they'd need or doing load-demand calculations, so that number might be way of base... hopefully.  


     wow, I've used them a ton but have never been quoted that much.

    0Reply
  • Thomas B.
    OP
    Member since 2020 · 37 posts · 11 votes
    3y

    I have decided to go with Chris Ruffo at CSR Electrical to handle the project. So far, they have been right on top of communications; email, phone, and text! Chris answered all my questions, gave me a few pointers to help bring the bill down a little by removing the old wiring myself, and he was willing to break down the project into separate phases for the other two units. The overall bill for a complete rewire is still very high @ $24K (barring the unforeseen); however, I am narrowing the scope to just finish the 2/1 unit and get it rented. 

    Once the 2/1 is rented, it should cover the debt service and I can refinance, to free up my HELOC and 401K loan to finish out the other 2 units with enough left over to snap up another property or two, this time using hard money instead of going it alone!

    Do any of you see a problem refinancing with just the 2/1 complete? 

    Note: This IS technically a 2/1 with an attached 1 car garage and a detached 2 car garage in the rear. The attached 1 car has been converted to living space but not yet renovated. The unit in the detached garage is a complete gut-job. I have several online home-value tools coming in around $150-165K, although I am not sure if they are counting it as a 3/1 or not. 

    0Reply
  • Thomas B.
    OP
    Member since 2020 · 37 posts · 11 votes
    3y

    Finished Electrical Rough-In on the 2/1 unit. Awaiting insulation & drywall before installing outlets and lighting fixtures. 

    With several recent rate hikes, my HELOC is eating me alive! All said, I am at $1600 a month debt service between my HELOC and 401K Loan! I panicked and dumped all available funds back into the HELCOC to paydown the balance what little I could.

    Shopping around at the local banks and found Navy Federal CCU really helpful and willing to work with me to get a Construction Loan. After some misunderstanding on my part, all they could offer was $80K, which was great but they also required that I use a GC from their approved list. 

    I could only get 2 to bother coming out two to look and another to quote me without a walk-through. The lowest quote was $113K!!! They couldn't understand I am only renovating for minimum maintenance, and to pass Sec-8 inspection, not max-resale value. 

    All I want is to refinance my available debt on this project to a lower rate fixed interest product... preferably with a 30-year term. I would also consider a 20-year note if the interest was low enough. 

     So far, I have not heard from any local banks offering anything other than 15-year mortgages. 

    Another hurdle seems to be their reluctance to do a cash-out to pay off the HELOC. I believe I can write a Deed of Trust to record the outstanding balance of the HELOC and 401K loan as a mortgage from my "Personal Self" loaning it to my Sole Proprietorship. The bank would then see it as a simple refinance rather than a cash-out, right?

    0Reply
  • Thomas B.
    OP
    Member since 2020 · 37 posts · 11 votes
    3y

    If I could cut my debt service in half, I could easily self-fund the remaining portion of the 2/1, rent it out, and use the NOI to finish the other 2 units even quicker.

    Lesson Learned: Never use a HELOC to do a 100% cash purchase! 30% down then finance the rest with bank or PM.

    0Reply
  • Hamp Lee IIIPro Member
    Real Estate Agent · San Antonio, TX · Member since 2019 · 1k+ posts · 832 votes
    3y

    Congrats to you for stepping out! Keep learning and growing!

    0Reply
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