Diary of a Rehab. in Providence

Diary of a Rehab. in Providence

Investor · New York City, NY · Member since 2013 · 137 posts · 50 votes

Dear BP community: It is official!  

Through tax lien investing a 2 family house landed on my lap. Like the old adage says, "When life gives you lemons...Make lemonade" and that is what I'm trying to do here.

Here is a description of the property and I'm attaching a pictures.  This property is located in a C class neighborhood in Providence , RI.  The things this house has going for are that is located very close to one of the major hospital in the city, is close proximity to the entrance to Highway I-95 and is the only delapidated property on the block, all other houses are owner occupied and in good condition.

I got the property after foreclosing on it in May 2017, but did not have the time to go and see it until last week.  In the mean time, I found a very nice, local RE agent while I was working in New Zealand (NZ), that offered to help me and she has been extremelly useful as she visited the property, took pics and sent them to me in NZ. She also tried to get 3 contractors to give me 3 bids about how much it would cost to rehab this property.  She did not succeeded on that one.  No many contractors want to work in that part of town :(

I also placed an ads here looking to partner with a General Contractor (GC), but no-one took the opportunity.  Finally through an acquittance I found someone that is interested in partnering with me.  

My initial offer was to form a LLC. I will be the partner buying the materials and covering carrying costs and the contractor will take care of all the work and we will split the profit 50/50. Well...My prospective partner has a different proposal: He wants to work for me. He will give me a discounted rate in the work and will find subcontractors who do the work for a "reasonable price". I will pay him in an schedule, as I would pay any GC and in addition he will get a percentage after the asset is sold as he allegedly will be working for less money. Something that bother me about his proposal is that when I asked for 2 more bid, he seemed annoyed (If I don't get other bids, how do I know that the price he is charging me is descounted? I don't know much about construction, although I have read "The book on estimating rehab cost" by J . Scott)

That is it for now....In my next entry I'll tell you more about the numbers and I hope finally to have a scope of work that I will be discussing with you all. 

I'm going to be blogging my adventures with this project and hoping to get some support, encouragement and advise from the BP community.

Until soon BP community!

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Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
9y

@Vania Castillo is this deal contingent on you partnering with a Contractor? I only ask, because if all the contractor is providing is his labor, then you should really just pay him for his scope and not split any profit.

The reason for this, is actually what you alluded to in your post. You wanted multiple quotes to confirm the "deal" he is going to give you. When you asked he did not want you to. This leads me to believe you are not getting any deal, but paying him full price AND then giving him more money at the end... He is the winner if that is the case.

I can't imagine you couldn't find a contractor willing to simply GC the project for regular rates in that area. This leaves you with all the profit at the end.

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  • Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    @Vania Castillo have you made any progress with the clean out and getting a better idea of what you are up against?

  • Investor · New York City, NY · Member since 2013 · 137 posts · 50 votes
    9y

    @Brian Pulaski among the several strategies suggested to me it was the possibility to wholesale.  The barrier to pursue that option was finding the right person to work with.  As I mention before, I was willing to sell at any point if the price made sense and I could recover my investment and make some profit. In the past I got offers that were even offensive in which I would be selling at a lost.  I know the property needs A LOT of work, but it has potential.

    Last week, I have gotten better offers and I'm exploring that possibility.  Hopefully this weeks I know better.

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