Hi BP folks,
Since I've gained so much from the purchase and rehab stories here I thought its my time. Here are the details of my project. This will be a Buy Rehab rent, I will NOT refi. Details below.
My goal for this property is to replace or lower my current rent of $1500/month to get into a property that WILL cash flow once I move out.
Listed as a triplex, asking 850,000 ( this is in LA so those of you from PA or MO, thats the going rate for multiplexes here)
3/2 main house, 1300 sq ft. ( I will live in this one)
duplex contains two 1 bed 1 bath, approx 450 sq ft each.
SURPIRSE! Also contains an unpermitted garage studio conversion. approx 300 sq ft.
One unit will be delivered occupied paying 1200 month.
6 weeks. New flooring, kitchen and bath for the vacant 1/1, studio will be rehabbed but depends on permits. Stand by on this one.
Known problems are:
Sewage pipe needs to be snaked every 6 months, might need a new system
The existing tenant was described as a "pain in the ***". This is rent control so as a landlord I have little power here but I've only spoken to the current owner so he could be incorrect.
830,000 over 30 year at 4.25% * ( see below for loan details)
monthly payment 5250
pro forma income at fully occupied units
1/1 1800 (rehabbed)
out of pocket each month 1250. That is a win here!
prelim rehab cost: 80,000 (if needs a new sewer system)
This is an ongoing project as I hope to enter escrow tomorrow or Wendesday. Will be updating as I progress since Ill be in a 45-60 day escrow due to my loan limits.
* Im using a program called NACA which allows me to put less than 20% down without PMI. For those interested PM me. Its not for the investor but for the beginner.
@Jaheel Muss, Can I pm you? I haven't spoken to anyone who actually CLOSED with NACA just people in various steps along the way.
I hired a sewage guy last Saturday personally and he found three full blockages (He snaked most of the 160 feet of the line). So gives us some negotiating power for sure.
I brought on a NACA inspector who did a fantastic job and report will be out today.
UPDATE: After initial inspection, 3 of the 4 units need down to studs rehab due to heavily deferred maintenance. Problems are below:
Rotted out subflooring in both 1/1 bathrooms.
knob and tube wiring in duplex ( needs brand new wiring)
outdated and poorly functioning kitchens
outdated electrical paneling
rotted out support beams in the flooring of main house and duplex
Incorrect legal size of bedrooms, in CA ( not sure about elsewhere) bedrooms need at least 100 sq ft with a closet and window. These are 64 sq ft with no closet.
Studio is the worst of all 4, needing a gutted kitchette, reworking of the floor plan and new wiring/exterior, completely new bathroom.
Main house has poorly updated external wiring, poorly updated external covering (basically terrible build on an expansion) and a few rotted out wooden structure beams below the house.
roofing and foundations are solid.
Its in a B- area that is showing signs of improvement by the city and businesses within walking distance.
Big enough lot for off street parking
I can wrap my rehab costs into my loan.
So rough rough estimates are about 100K for rehab, working on contractor bids this week.
Any advice from BP folks better ways to estimate rehab costs? What am I missing since this is a huge project for starting out but from my research it will garner positive cash flow after rehab. I have a mentor who is guiding me along the way and plenty of experienced people whom I am bouncing all ideas off of as I go.