Chicago, IL · Member since 2015 · 469 posts · 81 votes
I'm a bit nervous...who am I kidding...I'm very nervous...as I am prepping for my first rehab. I've got the house in my sights and hopefully will be closing on it soon. I'm pretty anal about things so I'm always checking and re-checking my numbers when it comes to the ARV, out of pocket, holding costs, hard money loan interest, private money loan interest, etc. Just trying to make sure that all my i's are dotted and all my t's are crossed.
Investor · San Diego, CA · Member since 2015 · 111 posts · 34 votes
10y
Good luck to you! The one piece of reassurance I would give is to not let fear overwhelm you. I did my first rehab 10 years ago and, looking back, it was quick a boondoggle. That said, I survived and learned a tremendous amount. I would overestimate the costs and underestimate the ARV just to be safe. I'd also recommend a solid plan to pay back the hard money loan as soon as you can. If you are buying in Chicago (where BP says you are from) it should be fairly easy to resell quickly. You could always consult with a local realtor to get statistics on "days on market" for the neighborhood.
Real Estate Broker · Chicago, IL · Member since 2015 · 56 posts · 19 votes
10y
i would wish you luck but successful investment is not about luck but about checking and rechecking and setting up clear goals. Sounds like you've got that covered. Good success to you on your project!
Investor · San Diego, CA · Member since 2015 · 111 posts · 34 votes
10y
Good luck to you! The one piece of reassurance I would give is to not let fear overwhelm you. I did my first rehab 10 years ago and, looking back, it was quick a boondoggle. That said, I survived and learned a tremendous amount. I would overestimate the costs and underestimate the ARV just to be safe. I'd also recommend a solid plan to pay back the hard money loan as soon as you can. If you are buying in Chicago (where BP says you are from) it should be fairly easy to resell quickly. You could always consult with a local realtor to get statistics on "days on market" for the neighborhood.
Chicago, IL · Member since 2015 · 469 posts · 81 votes
10y
Thanx Johnathan!! I did just that with the costs and ARV along with paying back the hard money. I am a local realtor so that helps me with the ARV and the DOM.
Chicago, IL · Member since 2015 · 469 posts · 81 votes
10y
@Bill Hinshaw...Be glad to. Just did my rough walk thru so far. Haven't walked thru with my GC yet to get the detailed SOW. Once I have that, then I will plug that so that I have my more realistic picture and I will share them. We're set to do that this Friday morning...
Property Manager · Boston, MA · Member since 2014 · 194 posts · 73 votes
10y
jerry don't mean to burst your bubble. Take into consideration the GC. Trust but verify and verify and then verify and when you think you have all your crap together and feel very comfortable verify some more.
Make sure the GC gets all the permits before starting construction. It's 2016 and most of these GC will try to bypass steps that could be very costly. Be a by the book kinda guy to the GC. But be very respectful and have a solid contract payment plans and what scope of work that will be done. And make sure to have 15% kickbacks incase **** happens. Good luck
Investor · Orlando, FL · Member since 2012 · 183 posts · 155 votes
10y
Jerry Stanford Make sure to get insurance on the property. You can get a builders risk policy or vacant but builders risk is probably best. It's rare but the worst can happen, I would know. One of our projects just had a large fire caused by some older wiring in the attic. Luckily, no one was hurt except for the home but this is definitely one lesson I will never forget. It sucks to pay a couple thousand for such a short period, which is why a lot of people don't insure their flips. Glad I'm not that much of a risk taker or we would have just lost a couple hundred thousand dollars. I don't think that would have gone over well with our investors.
Insurance Agent · Maitland, FL · Member since 2015 · 397 posts · 244 votes
10y
Be careful with vacant insurance. Usually excludes theft. And what will happen in cook county? They solved the fire issue years ago, it's theft. Renovators builders risk is what you need.
Investor · Orlando, FL · Member since 2012 · 183 posts · 155 votes
10y
My builders risk doesn't cover theft but I think you can add it on for an additional cost. It all depends on who your carrier is though. Our best option has always been with Tapco.
Flipper / Rehabber / Real Estate Investor · Toronto, Ontario · Member since 2012 · 392 posts · 77 votes
10y
Insurance is absolutely mandatory! Not all builders risk includes theft unfortunately. And they all have different deductibles too, so it probably pays to shop around.
There's a certain amount of risk that you always have to take on when doing a flip. Having said that, there's ways to mitigate the risk (e.g., get 3 or 4 quotes - not just one! Get an alarm system and/or night watchman after you get your plumbing in, etc.).
Half the battle is just pulling the trigger - as scary as that is (and it's a very scary thing that all RE investors have to face when they start). Before I started I remember a mentor telling me that RE investing is like potato chips - it's impossible to stop after just one! lol Pretty soon you'll be telling us how you've just completed your 10th flip. Keep pushing!
Rental Property Investor · Fond Du Lac, WI · Member since 2015 · 261 posts · 78 votes
10y
Instead of only focusing what could go wrong, what you might be missing, etc-- be sure to spend a little time what the deal will look like when you crush it!!
Chicago, IL · Member since 2015 · 469 posts · 81 votes
10y
Hey @Brandon Clark...unfortunately it didn't. My private lender backed out at the last minute and that was my only source of funding. I haven't given up on it as the property is still there, just working on getting the funding back...