And So It Begins... My First Rental Property Renovation...

18 Replies

First, thank you to BP for building a treasure trove of valuable and actionable information through the forums, podcasts, webinars, articles, etc... I've learned so much and built a level of confidence about moving forward than I would not have otherwise had. I've also connected with a few fantastic local RE investors who I wouldn't have otherwise had the pleasure of knowing and learning from.

Last week, I closed on my first REO/Foreclosure property-- a 6/4 duplex in Tampa. It was vacant for more than two years and needs extensive renovation. Every day, I'm learning a tremendous amount-- things that I simply couldn't learn only from reading blogs or listening to podcasts. You just have to begin, take the plunge, make the leap, do the hooky-pokey, whatever you want to call it.

The purchase/closing process was very smooth and I've since been busy interviewing GCs, electricians, well system companies, and many more trades folks. And the BEST NEWS is that I just received an email this AM that I was approved for a line of credit which will cover the entire renovation. Thanks and appreciation for the push from @Ben Leybovich  who challenged me to seek financing at local community banks.

The reality of what I'm about to embark on sunk in yesterday when a big red dumpster was delivered in front of the duplex. I feel like a Freshman starting his first semester at Cash Flow University!

And so it begins... ;)

Mark...

Congratulations my friend! I wish you smooth sailing and a comfortable education.

congratulations! That's sounds awesome! I love new deals as I seem to learn something new ever time :)

Good luck! Look forward to watching your progress! 

Good Luck Mark.  I am in Wesley Chapel.  I have yet to undertake a renovation project but have a few rental properties I have purchased the last few years and am looking to always expand my portfolio.  Please post updates of your progress I will follow because then I can build up the courage to embark on such a project.

Are you planning on occupying one side @Mark J.  ? How did you finance? Oh yeah, congratulations!

Thanks for the encouragement @Anthony Perugini 

I figured, you know, why not start with the most difficult project first-- a foreclosure that needs a major remodel when I have absolutely no contacts in the trades field here in Tampa! It can only get easier from here, right?

And besides, who needs turnkey?! (although you may find me curled up in a corner watching my Asset column shrink and my Liability column grow while I'm loop-mumbling "Why, why, why didn't I go turnkey?!" Check back in a month...)

@Michael Hartman  I paid cash for the duplex. My full-price offer was the first in to the bank and, given it was all cash with a short five-day inspection window-- it was just what the bank was looking for to clear this one off the books. I'm financing the reno through a line of credit on the equity I have in the duplex (and my own good credit). And no, I have a primary residence. This property is a buy-and-hold. After the reno, I'll refi the duplex with a conventional mortgage, pay-off the line of credit, and get my seed capital back.

My goal is to acquire one more duplex by year-end. Perhaps next year I'll look to build some capital through a flip (which I've never done either), but this year I'm staying focused on my goal. Once this project is complete, I'll look for my next. While good deals may be passing me by in the meantime, my process (at least for now) is to concentrate on one property at a time.

Congratulations Mark. You've already done the hardest part - pulling the trigger on the deal. I'll tell you why you did not go turnkey - Forced Appreciation! Now you not only take advantage of the cash flow but you also capture the entire appreciation once the property is fixed up. Real Estate is an IDEAL investment...

I- Income

D- Depreciation

E- Equity

A- Appreciation

L- Leverage

Sounds like you're going to hit on all points.

Good luck...

Sounds like a great plan Mark! Thanks for breaking down the deal for us, I'm learning more every day. I too am planning on getting started with a duplex and future multi family buy and hold investments. Keep us posted on your progress!

Great share Mark! Thanks Nuhan for the IDEAL post! I will definitely use that moving forward!

Mark , congrats and looking forward to seein your progress!!! 

@Mark J.  

Can't wait to see it Sunday! Congratulations again!

I am excited to see how it shapes up! I love that you have a strategy in terms of sorting out the finance side of things, a plan for its disposition (long-term hold) as well as doing the renovation.  Seeing how well you have planned, I expect to see your continued success in this endeavor.  

So, here we are 3 1/2 months later. I wish I could post that I'm done. That tenants are in and the cash is flowing. But I can't. Not yet. 

I've made just about every mistake you can make on your first project. So much has gone wrong. So much money spent. But-- strangely, I'm still having fun. ;) The daily challenges. The unexpected twists. My ******** meter getting more accurate all the time and my tolerance for ******** is zero. A few weeks ago, I fired a crew of tile guys after just three hours of work. They were that bad. And that's just the beginning. Lawyers. Bankers. Hospitals. A trillion trips to Home Depot. And lots of cat ****.

When this this is over-- I'll write-up a post that you'll think is a lie. That's how good the story is.

Hang in there Mark!  Hope things come together real soon.  Will be looking out for your updates.

Congratulations!

How did you pitch the bank to give you a line of credit to fix the property?  Did they base it on the deal or your good credit (or both)?  Since it is your first major renovation there must not be much history for them to rely on.

But Mark  you told us very little LIKE:

How much is the Duplex?
What is a 6 4 duplex?
How much is the renovation?

How much is the line of credit?

Why were 3 guys doing 1 tile job?

What had to be rehabbed?
So far what has been completed?


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