Project #3: Single-Family Home in Havre de Grace, MD
So, we are closing today on our third LLC project. Previously, we closed on a single-family home, which we renovated and rented. We have also purchased a three-unit multifamily that has all three units rented, but hasn't turned out quite as well as we've hoped.
Our third project is another single-family home in Havre de Grace, MD. This one involves a bit of risk, in that the house is not entirely on the lot. The front of the house is built on property owned by the City, but that is grandfathered in. The very back of the deck extends ever so slightly over the property line of the rear lot. We're considering making an offer to buy 15-25' of the lot behind so that we can create a decent fenced-in yard to make the property more attractive. I discovered the issue with the location of the house, and as a result was able to bargain the purchase price down another $10,000 from the initially agreed price, which was already about $10,000 below the original asking price. In the end, we're purchasing the house for $81,900 (about $88,000 after taxes, fees, and realtor costs). The house is a 3/2 with about 1700 square feet of living space.
Our rehab budget is about $50,000, including $12,000 for two bathroom remodels, $5,000 for a kitchen remodel, $9,000 for a new roof, $10,000 for HVAC and plumbing, with the remainder for carpeting, flooring, painting, and appliances. Although the floor plan would be best if we removed some walls from the kitchen and opened the space up, the extra cost to do so (given that HVAC ducting and electrical run through the wall to the second floor) is more than we can justify for a rental. Instead, we're going to open up the kitchen somewhat from the front door, so that you can see all the way through the dining room to the back deck.
So, all told, we expect to be in for about $138k. The ARV should be $185-200k. Monthly rent of $1400-1600.