MY FIRST REHAB WENT A BIT TOO WELL. CONCERNED!!!

MY FIRST REHAB WENT A BIT TOO WELL. CONCERNED!!!

Atlanta GA 路 Member since 2019 路 101 posts 路 59 votes

So guys, it you refer to my first post I spoke about my very first rehab and how it was coming along.

For context, we purchased this home at an auction, used a PML to finance the deal @ 9.5% APR, 80% LTV on Purchase and 80% LTV on Rehab.

Purchase price was $187,500 (winning bid), ARV was appraised at $240k.

Rehab cost: $21,500

To be honest at the start we had no idea what we were doing. We just decided to jump in and give it a go. After I ran the numbers when I did eventually get some experience, I realized we would actually make a profit 馃ぃ馃ぃ馃ぃ馃ぃ

Our plan was "Get in there, U may lose money on the first one but GET IN THERE".

We have actually decided to do a trial STR cashflow for this property and see how that pans out. As a result it is currently listed on AirBnB.

Thing is I feel worried cuz we gambled on our first property, looks to have worked out good. We've already paid up this month's interest on the PML via the STR.

I just feel like there's a bubble waiting to burst somewhere up ahead.

That said, here are a few pictures of our rehabbed home. Proud of what we achieved.

Kitchen
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Rental Property Investor 路 Chubbuck, ID 路 Member since 2018 路 532 posts 路 466 votes
6y

So if you flip it you make $6k? Are you refinancing it to keep long term? If so that is a big house and will have some big expenses if anything happens. Yeah I think you need to be more conservative with the numbers going forward.

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  • Atlanta GA 路 Member since 2019 路 101 posts 路 59 votes
    6y
    Originally posted by @Dylan H.:

    @Laurence Obi

    Hey Laurence, congratulations! House looks great! Are you going to refinance out of the private money or have you already done that? What's your long term play? I wouldn't worry too much of a bubble since you have about 20% equity in the property if the ARV is correct.

     Hi Dylan,

    ARV is spot on.

    yes I intend refinancing in April '20.

    i'm rubbing my palms gleefully at all that equity. I'm grateful for the opportunity. Didn't see that coming when I bought this. That's how naive I was. But I have grown in leaps and bounds since then. 30 hours + of podcasts can do that to you 

  • John PowellPro Member
    Real Estate Agent 路 Kennesaw, GA 路 Member since 2015 路 308 posts 路 153 votes
    6y

    @John Teachout you can get an appraisal with proposed repairs in GA it cost around and extra $50-100. You have to have a detailed list of work to be done and or a bid from a contractor. I鈥檝e personally done it as a borrower from a bank and as a private lender. If you are already getting an appraisal this can be a great tool to know if your rehab plans will truly add value. I just had one come back yesterday that only gave $4k additional value to adding a 2nd bathroom to the existing square footage. Obviously the investor is not going to spend 10k adding a bathroom that will only bring 4K in the eyes of the appraisal.

  • Towson, MD 路 Member since 2019 路 44 posts 路 18 votes
    6y

    @Laurence Obi lol wow it looks great. Time to do it again and again and again. Keep it up !

  • Atlanta GA 路 Member since 2019 路 101 posts 路 59 votes
    6y
    Originally posted by @Robert Nelson:

    @Laurence Obi lol wow it looks great. Time to do it again and again and again. Keep it up !

     Many thanks.馃憤馃従馃憤馃従

  • Alexandria, VA 路 Member since 2017 路 22 posts 路 12 votes
    6y
    @Laurence Obi Congrats on the deal. You keep saying your a beginner but clearly your confidence level running high. Keep it up! I'm actually in the DC area but looking for my first property in ATL as well. I have a family member that's an experience broker in the the Atlanta area. Planning on sitting down with her soon. Definitely would like to keep in touch and link up when i'm in town. Are you only doing deals in the Atlanta Metro area?
  • Rental Property Investor 路 Glen Cove, NY 路 Member since 2016 路 109 posts 路 25 votes
    6y

    The house looks great- good job!!

    I'm curious what your rehab consisted of. What did your scope of work cover for the $21,500?

  • Rental Property Investor 路 NC 路 Member since 2018 路 776 posts 路 776 votes
    6y

    Seems like you left yourself a good buffer for cost overages. Did you have a purpose for the property before you decided to buy? Sounds like you jumped in and then decided.

    I wouldn't worry about a bubble as long as you can pay the mortgage. You have 30k worth of equity already. Do the numbers pan out with a long term tenant?

  • Atlanta GA 路 Member since 2019 路 101 posts 路 59 votes
    6y
    Originally posted by @Eric Telese:

    The house looks great- good job!!

    I'm curious what your rehab consisted of. What did your scope of work cover for the $21,500?

    The home had NO KITCHEN.

    It was foreclosed so original owners took out the entire kitchen.

    kitchen - $8k

    tiling - $4500

    Painting - $5000

    Vanitied and minor touchups for the rest.

  • REI Mentor 路 Perry, UT 路 Member since 2019 路 101 posts 路 123 votes
    6y

    @Laurence Obi Conratulations on taking your first project to completion! I love the fact that you just dove in head first with realistic expectations, knowing the most value you would take away form it would be your education. Bonus that you came out with equity too! I think you are smart to get the payments covered through renting it. The choice of short term AirB&B is also a good choice for higher rental potential as long as you have strong local property management to handle the demands of short term tenants' needs. My advice is to refinance as soon as your seasoning period is over. Not all conventional loans/lenders are the same so start shopping now to find the right one. You are shopping for the shortest seasoning peroid as well as the lowest interest rates. Then you'll get to choose whether you like the cash flow it generates and keep it or cash out with all the equity. You may get to do both. Cash out refi and keep it if it still cash flows. Good for you!

  • Rental Property Investor 路 Glen Cove, NY 路 Member since 2016 路 109 posts 路 25 votes
    6y

    @Laurence Obi not bad. No exterior work needed? Roof was good? It looks newer.

    The siding, windows, doors, all look great. Was that stone-work/veneer siding already there when you purchased? It looks great- that stuff is usually pricey, at least up in NY.

  • Member since 2019 路 14 posts 路 3 votes
    6y

    @Laurence Obi

    Hi Laurence, I live in Lawrenceville, GA. If your friend have a deal that you can鈥檛 take let me know.

  • Atlanta GA 路 Member since 2019 路 101 posts 路 59 votes
    6y
    Originally posted by @Inmer Manzanarez:

    @Laurence Obi

    Hi Laurence, I live in Lawrenceville, GA. If your friend have a deal that you can鈥檛 take let me know.

    Hi Immer 

    Let's connect.

  • Atlanta GA 路 Member since 2019 路 101 posts 路 59 votes
    6y
    Originally posted by @Eric Telese:

    @Laurence Obi not bad. No exterior work needed? Roof was good? It looks newer.

    The siding, windows, doors, all look great. Was that stone-work/veneer siding already there when you purchased? It looks great- that stuff is usually pricey, at least up in NY.

    Hey Eric. Yes the veneer siding was alrdy there when we purchased this. All we did was pressure wash it.

  • Rental Property Investor 路 Seattle, WA 路 Member since 2013 路 2 posts 路 1 vote
    6y

    Thanks for sharing. 馃憤

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