Diary of a 3/1 SFR Rent to Rehab - in Southern New Jersey

14 Replies

I've enjoyed reading so many of these deal diaries that I wanted to add one I am working on right now. I really think there is a ton of value added to our community by sharing what the life cycle of a deal looks like at every step.


The Subject of this deal is a 3/1 rancher build in 1920. I own a home in this neighborhood and really feel like it is a sweet spot for my area due to great price to rent ratios and lower than normal NJ taxes. 

This is one of those deals that I made an offer and was rejected many times but the property had been on the MLS for months and eventually they came around. I told the agent I would be speaking with her monthly until they sell to someone else or accept my offer :)

Asking Price: 38000

Purchase Price: 20000

Rehab Estimate 18000

ARV: 70000

Taxes: 2400

Insurance: 600

Rent estimate: 1000-1100

This will be the largest rehab I have managed and will be documenting it every step of the way. I am performing the demo myself but 99% of the real work will be performed by professional trades.

So far I have had an electrician, plumber and GC in the home to bid / inspect and begin work.

Everyone loves pictures so here goes

Outside before:

Living Room before:

Bath before:

Classy bathroom ceiling:

Kitchen before:

Porch/ Sun room before:

good luck with the rehab!  Looking forward to the progress.  

And it has its own BOARDWALK! I look forward to watching the progress.

ow much do you estimate for:
Kitchen

kitchen cabinets. counter tops, stove, dishwasher, sink, refrigerator

washer dryer hook ups, tile floor, labor

heat/hot water

Bathroom fixtures

Bathroom  tile floor, tile walls

Painting

Porch floor etc

Thanks to everyone for the comments.

@David Semer  this is definitively a big forced appreciation play. If I can manage the rehab properly and at or under budget I should be left with a good amount of margin. 

@Scott Weaner  @Alexander Merritt that boardwalk removal is going to cost me an additional permit for removal at $50 but will actually save me $20 annually on taxes talk about great ROI lol

@Barbara G.  I worked with the JScott rehab analysis worksheet and added a few line items so I am feeling pretty good about the working numbers.

Kitchen - $2500 - total not including finish and rough plumbing or paint / drywall work

kitchen cabinets. $900 (Great craigslist find) - Here is a shot of the cabinets 

counter tops, Corian counters came with the cabinets

stove, Electric - $500-700

dishwasher, NA

sink, came with cabinets

refrigerator - $1000

washer dryer hook ups - part of rough plumbing work, residents will provide w/d

heat/hot water - new electric water heater @ $250

Bathroom total - $1700 - not including finish and rough plumbing or paint / drywall work

Painting $1000

Flooring - $2330 - We are keeping / cleaning the exisiting kitchen 12x12 tile floor, we are installing allure vinyl plank floors throughout the dining room / living room bathroom and porch, carpet in all bedrooms, existing tile in mechanical / washer / dryer room.

I added up these numbers from my rehab analysis spreadsheet. My total ESTIMATED rehab costs are at $18410

Looking forward to an update next week to include - demo, subflooring, and rough plumbing.

Another week gone by and we have continued work on this rehab.

We had quite a bit of demo to do in the bathroom and decided it was easier to pull the entire floor / subfloor out and just lay new flooring. After demo we found 8 layers of flooring in the bathroom, yikes!

All other demo has been completed to include replacing all drywall in mud room, bedroom 1 and the bathroom. Unfortunately we couldnt complete drywall work because the gas company has yet to make it out to turn on service. No heat - no drywall mud and taping.

This leads me into a lesson learned. When a property has had utilities disconnected for greater than X (for me this was 1 year) it will require coordination between the local township, contractors and the utility company. For me this has been a small pain point but lesson learned. I should have planned this out far in advance of "jumping in". To date all utilities have been inspected and turned on except gas.

All rough plumbing has been completed to include new PEX feed lines.

All receptacles have been replaced with new receptacles. We have installed a new 220 line for the stove and completed the design of the kitchen. I'll provide pictures once the cabinets are installed.

We have completed / fixed all sub flooring in the home. The finished flooring will be a mix of carpet in the bedrooms, 12x12 tile in the kitchen and allure vinyl planking in all other rooms. 

@Jon Lafferty  

Sounds like you're making very nice progress. Keep up the good work! I'm looking forward to some more photos.

Wow how time flies, I wish I could report back that this rehab has been completed but I'm busy getting my masters degree in landlording :)

I have my first eviction on March 13th.

The rehab is coming to an end with 3-4 weeks of work left.

Completed Punch list:

Kitchen: cabinets mounted, counters cut to size and mocked up, electric completed for stove, new light fixtures

Bathroom: new everything, drain lines, feed lines, tile surround vanity, new toilet

BR1-3: all drywall and molding has been completed and prepped for paint, new light fixtures

Utility room: washer dryer hookup installed/ electric run, New furnace, 2 new windows

Living Room / Dining room: Drywall repaired, new fixtures, 5 new windows

Remaining punch list:

Paint: Going with realist beige on walls, white molding and ceiling

Flooring: Allure vinyl

Demo ramp / stairs in front of house, repair / replace existing steps

General Cleanup

Another lesson learned:

I had set what I thought were realistic timelines / phases for my GC / Handyman folks. What I have learned is that you really need to watch how you disperse funds in relation to milestones. There have been times I've paid a contractor and didnt see them for another week. Many of the trade folks seem to keep bidding other jobs to keep thier cash flow going. The problem with this is they get spread to thin. Now that I am nearing the end of this rehab I have trade folks working 5-10PM because they need to work during the day on a different job. 

In the future I will try to do a better job defining SOW and payment schedules with milestones.

Here are some photos of the rehab in progress:

Bath:

Kitchen:

It’s probably not a good sign that I had to go to page 14 to find my latest update on this project from 3/5/2015!

Newbies take note and learn from my mistakes. This rehab has proved to be a slow and painful process from start to finish. Why? Because I knew I was the anomaly, I knew I was unique and could save boatloads of money by working this project from start to finish. Let’s examine some of the finer details.

Deal closed: 11/2014

Begun demo: 1/2015

Begun rehab with trades: 2/2015

Gas was turned on: 3/2015 FINALLY

First contractor disappeared: 3/2015

Lead abatement on another unit: 3/2015

Eviction on another unit: 3/2015

Playing games with contractor who disappeared: 5/2015

So from June of 2015 I have been working this project on my own. I was so frustrated not to mention running low on funds so I put my nose to the grindstone and worked, worked, worked.

THIS WAS NOT SMART!

I should have at that point found my 3rd contractor / handyman to complete the solid months’ work but I didn’t.

As of 8/2015 the unit is complete and the tenant selection process has begun.

What have I learned?

  • -It costs much more to not hire a professional
  • -When contractors disappear pick up the pieces and hire another or even better have one in the pipe line waiting
  • -Focus on management of the units / tenants rather than rehabbing units, tenants and the day job.
  • -Have plenty of cash at your disposal for the bad things that WILL happen

Without further ado after 8 months here are the final results:

        

        

                        

               

        

        

Originally posted by @Jon Lafferty :

Wow how time flies, I wish I could report back that this rehab has been completed but I'm busy getting my masters degree in landlording :)

I have my first eviction on March 13th.

The rehab is coming to an end with 3-4 weeks of work left.

Completed Punch list:

Kitchen: cabinets mounted, counters cut to size and mocked up, electric completed for stove, new light fixtures

Bathroom: new everything, drain lines, feed lines, tile surround vanity, new toilet

BR1-3: all drywall and molding has been completed and prepped for paint, new light fixtures

Utility room: washer dryer hookup installed/ electric run, New furnace, 2 new windows

Living Room / Dining room: Drywall repaired, new fixtures, 5 new windows

Remaining punch list:

Paint: Going with realist beige on walls, white molding and ceiling

Flooring: Allure vinyl

Demo ramp / stairs in front of house, repair / replace existing steps

General Cleanup

Another lesson learned:

I had set what I thought were realistic timelines / phases for my GC / Handyman folks. What I have learned is that you really need to watch how you disperse funds in relation to milestones. There have been times I've paid a contractor and didnt see them for another week. Many of the trade folks seem to keep bidding other jobs to keep thier cash flow going. The problem with this is they get spread to thin. Now that I am nearing the end of this rehab I have trade folks working 5-10PM because they need to work during the day on a different job. 

In the future I will try to do a better job defining SOW and payment schedules with milestones.

Here are some photos of the rehab in progress:

Bath:

Kitchen:

Jon your doing a great job on this property...keep up the good work.

Originally posted by @Jon Lafferty :

It’s probably not a good sign that I had to go to page 14 to find my latest update on this project from 3/5/2015!

Newbies take note and learn from my mistakes. This rehab has proved to be a slow and painful process from start to finish. Why? Because I knew I was the anomaly, I knew I was unique and could save boatloads of money by working this project from start to finish. Let’s examine some of the finer details.

Deal closed: 11/2014

Begun demo: 1/2015

Begun rehab with trades: 2/2015

Gas was turned on: 3/2015 FINALLY

First contractor disappeared: 3/2015

Lead abatement on another unit: 3/2015

Eviction on another unit: 3/2015

Playing games with contractor who disappeared: 5/2015

So from June of 2015 I have been working this project on my own. I was so frustrated not to mention running low on funds so I put my nose to the grindstone and worked, worked, worked.

THIS WAS NOT SMART!

I should have at that point found my 3rd contractor / handyman to complete the solid months’ work but I didn’t.

As of 8/2015 the unit is complete and the tenant selection process has begun.

What have I learned?

  • -It costs much more to not hire a professional
  • -When contractors disappear pick up the pieces and hire another or even better have one in the pipe line waiting
  • -Focus on management of the units / tenants rather than rehabbing units, tenants and the day job.
  • -Have plenty of cash at your disposal for the bad things that WILL happen

Without further ado after 8 months here are the final results:

        

        

                        

               

        

        

 Wow Jon! This is a job well done. I am an investor from south nj as well and would like to pick your Brain. Can we set up sometime to chat? 

@Gerald Gatyas absolutely! I love talking about real estate, especially people interested in my farm area or Southern NJ in general. Send me an IM.

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