Baltimore Rehab: Deal Closed!

10 Replies

BP Friends

We have closed on our first investment property in Baltimore and can't wait to get started. 2 bedroom 2 bath ((we are adding a bathroom) 1200sqft. 30k cash purchase with a combo of line of credit and private financing. ARV is 140k-160k. Rehab is looking around 75k (line of credit), which leaves little room for error. We want to use the BRRR Strategy but are afraid if we get a low appraisal, we may not be able to get all of our money out in the refinance. So, maybe it makes more sense to flip. Received an ARV appraisal already from a hardmoney lender who we felt didn't justify his numbers. Appraisal came in at 135k, which isn't far off but wasn't good enough Hardmoney lenders to approve the deal.

Looking for any suggestions for portfolio lenders in Maryland who will cash-out refinance a cash-flowing rental property with no existing mortgage. Also, does this property make more sense to flip?

Congrats on the purchase. How firm is that $75k rehab estimate? If you have a SOW, I would try to get more bids and see if you can get that rehab cost down so you'll have an easier time of cashing out on the refi.

Thanks! @Tim Youse We are working on renegotiating the scope of work down to a better price point now (fingers crossed). 

Congrats.

So how are you going to finance the rehab? Sounds like you are still working on that.

Seems tight overall for a flip. But profit is profit. Every one I look at right now is too tight for me. I only need to make $20,000 (even if some of that is for my labor) but it needs to be a SOLID $20,000 - not just if everything goes perfect.

Keep in mind that you may need to price it a little below market to get rid of it quickly. You have to offset time cost against price. I prefer to see them go quickly myself, especially with hard money.

@Martinis Jackson is your $75k rehab budget to rehab it as a flip or to rehab it as a rental? I heard on the board that flips generally cost more to rehab, as they need to be done to a higher "quality" or look. Rentals are done just enough to make them solid, but not necessarily as nice looking or high end as a flip to sell.

Is the $140-160 ARV solid? Personally I always lean towards the low end of the ARV range, which isn't far off your appraisal of $135k. Good luck whichever way you end up going.

Congrats on your first property!  I may have some contacts for you.  I wish you much success and can't wait to see the final product.

Thanks @Brian Pulaski . Our contractor gave us the 75k budget based on a flip, so we're pushing for a quality product for that price and hoping the ARV reflects the renovation costs.

@Shawn Clark I agree, things definitely need to go as planned, especially with the rehab. We are using a line of credit for the rehab costs. No hard money involved. There is a solid comp two doors down that sold for 160k, we are trying our best to bring our property up to par with that renovation. 

Originally posted by @Martinis Jackson :

@Shawn Clark I agree, things definitely need to go as planned, especially with the rehab. We are using a line of credit for the rehab costs. No hard money involved. There is a solid comp two doors down that sold for 160k, we are trying our best to bring our property up to par with that renovation. 

With a row house you shouldn't have much trouble getting to your ARV. I keep looking at SFH which is what I'm used to flipping, but they keep coming in quirky or on bad streets or something. I can't get comfortable that the ones I'm looking at will bring the ARV I need. Hoping to find one soon.

Hi,

Congrats on the first investment. How are you using a line of credit ? Is that a business line of credit ? Best wishes ! 

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