Investor · McKinney, TX · Member since 2012 · 588 posts · 224 votes
I've started my 4th rehab. Its a flip. It is the biggest one I've taken on so far and I'm a little nervous, but moving forward. Its a 4 Bd, 3 bath home approx 2200 sq ft. Its in a nicer area of town and the best thing is, its about 5 miles from my place of work! I've never done a house within 50 miles of my house! It is mainly cosmetic, but did need quite a bit of foundation work.
Investor · McKinney, TX · Member since 2012 · 588 posts · 224 votes
12y
@Brandon Hopkins I agree, for the most part it is good condition. Better condition than my prior 3 rehabs. It has some foundation issues. That foundation repair was completed today. We have some sheet rock damage and brick/mortar to repair from that. As with any foundation repair on a house this age in this area, we are going to test for under slab plumbing leaks. The kitchen was redone around 2001 so it is in decent shape but outdated. We'll do granite there and the bathrooms, do some tile, some wood, new carpet, paint in and out.....and of course, the grandmaw wallpaper has got to go. We are lucky that mechanics and roof are in good condition, so a few less things to worry about. We'll be doing a nice finish out on this one than I've done on prior rehabs.
Here are some pics of foundation work going on and what happens to mortar when you repair foundation (and signs from damage prior)
. I always find it shocking to walk into your house and find holes in your living room.
Investor/Syndicator · Downers Grove, IL · Member since 2014 · 80 posts · 78 votes
12y
@Shawn Thom I would love to find out more about the economics of your deal but I am intrigued by the foundation work. Can you go into some more detail on the work that is being done there?
Real Estate Investor · Elgin, IL · Member since 2014 · 19 posts · 4 votes
12y
Looks pretty good, you can really see the potential here. I am also curious on the details of the deal. Did you acquire the property through mls or wholesaler? what type of financing? Shawn Thom
@Brian Moore I don't know how much you know about foundation repair for house on slab in Texas, but it is fairly common. This house had approx 4 inch drop towards the front of the house. They will dig around the perimeter of the house in the affected area and sometimes into the slab on the interior of the house. they dig down to more solid or heavily compacted ground. On mine, a full grown man could stand up with maybe his shoulder level with the slab. They have a hydraulic jack and will jack up the house and put concrete piers that will help maintain it level. I am speaking as if I'm an expert- I'm not ;) I could be a little off on some of that process.
Investor · McKinney, TX · Member since 2012 · 588 posts · 224 votes
12y
@Malome Taylor I have a loan through a local bank that does "construction loans". Pretty good rates, 1 point, 7.5% interest only, 9 month loan, 15% down.
Real Estate Attorney · Plano, TX · Member since 2014 · 10 posts · 1 vote
12y
Looks like a great project! If the house is in the far northern suburbs, you'll have no problem unloading it. So little inventory, so many buyers!! Can't wait to see the progress. Best of luck!
@Malome Taylor I have a loan through a local bank that does "construction loans". Pretty good rates, 1 point, 7.5% interest only, 9 month loan, 15% down.
@Malome Taylor I have a loan through a local bank that does "construction loans". Pretty good rates, 1 point, 7.5% interest only, 9 month loan, 15% down.
@Malome Taylor I have a loan through a local bank that does "construction loans". Pretty good rates, 1 point, 7.5% interest only, 9 month loan, 15% down.
Are they covering the entire cost of purchase+rehab?
Investor · McKinney, TX · Member since 2012 · 588 posts · 224 votes
12y
Hey @Josh R. , they cover purchase price + rehab minus 15% (Your down payment) plus closing costs. There are some caveats around that for smaller deals (under 100k) which I don't remember.
I'll know more about timeline next week. At the rate they are going they'll be done in 2-3 weeks BUT we have to do the plumbing tests. I think the plumbing test are going to be this weekend or Monday. Obviously the more problems found, the more time it adds. But all in all, considering we just started the 24th, we're flyin'!
Hey @Josh R. , they cover purchase price + rehab minus 15% (Your down payment) plus closing costs. There are some caveats around that for smaller deals (under 100k) which I don't remember.
I'll know more about timeline next week. At the rate they are going they'll be done in 2-3 weeks BUT we have to do the plumbing tests. I think the plumbing test are going to be this weekend or Monday. Obviously the more problems found, the more time it adds. But all in all, considering we just started the 24th, we're flyin'!
How involved is the bank in 'finding problems'? Is the time being added because of the bank or because you are still doing your DD ?
Are your monthly payments interest only or PITI or ?
Is it called a construction loan as you mentioned above, or is there another name? It seemed you like you might have been referencing another loan product by using the words construction loan.
I'm very interested in as many details as you can provide me. PM me if you would like. I contacted a local bank here that advertised construction loans and they were not interested in any short term 'flip' loans.
Investor · McKinney, TX · Member since 2012 · 588 posts · 224 votes
12y
@Franklin Romine When I called them I did not use the words construction loan. I said I want to buy a house to rehab and sell. I think different states are different but there is an actual bank code that refers to construction loans, and that is specifically stated in the loan docs. The loan docs and the banks advertisements call them construction loans. Calling one bank isn't enough, call 30.
As far as finding issues, I am not aware that they look at any outside of what is going to affect them. This bank is more conservative than a regular HML. They did deny one house that was next to an apartment complex. When they do the initial inspection they may look more than I know, I was not there for that, but as far as the inspections for draws, they only look at what they are paying for.
There are different loan options, pre qualifications, etc. I suggest calling a bunch of banks (preferably national lenders) or getting with a good loan officer that has construction loan experience. That may help with clarifying the process in your area.
@Shawn Thom I am assuming the lenders wanted to know exactly what you wanted to do with the property. Is that so? Are you using a builder / general contractor?
Best wishes to you! The place has some great curb appeal!
Hey @Josh R. , they cover purchase price + rehab minus 15% (Your down payment) plus closing costs. There are some caveats around that for smaller deals (under 100k) which I don't remember.
I'll know more about timeline next week. At the rate they are going they'll be done in 2-3 weeks BUT we have to do the plumbing tests. I think the plumbing test are going to be this weekend or Monday. Obviously the more problems found, the more time it adds. But all in all, considering we just started the 24th, we're flyin'!
Hoping your test comes back all clear. That one needed lots of foundation work so hopefully being mostly along the front of the house you will avoid most of the plumbing.
Investor · McKinney, TX · Member since 2012 · 588 posts · 224 votes
12y
@Joe Demonte They absolutely want to know. This particular bank will do rental rehabs too. They want to know what you exist strategy is, what repairs you will be doing (You show the budget) etc. On some things like foundation repair they will require some documentation. I have worked with another HML before and they didn't require as much documentation etc, but they were significantly higher cost.
I am using a GC since I work full time. I got cocky on my 2nd rehab and didn't think I needed a GC. It almost killed me.
Contractor · Chicago, IL · Member since 2013 · 105 posts · 28 votes
12y
Great to know, thanks @Shawn Thom . I also noticed when a major construction change is needed from the original plan, its recommended to receive & approve a change order from the GC. Just an official document explaining the change. Something that may come up that the bank may want to see.
Investor · McKinney, TX · Member since 2012 · 588 posts · 224 votes
12y
Things continue to proceed well.
Good news this week
-Plumbing test came back with no leaks. the prior owner had already replaced a significant portion of the sewer lines so that must have helped.
-Wife found a great deal on granite. Level 4 & 5 granite for level 1 price. They had a couple of random pieces that they wanted to get rid of. She is good at sniffin' out deals and the pics she sent me look great.
-HOA approval came back on exterior colors. I hate HOAs.
-Foundation company got me engineer report & warranty info quickly which I need for my draw.
The granite was the last pending item for us to finalize our kitchen paint colors etc. We are rocking and rolling now. Winner, Winner, chicken dinner.