1st Extensive Reno- Acting as GC & Correcting Foundation Probs

5 Replies

Salutations BP fam!  

I've just contracted another residential redevelopment house and I'm focused on bringing the best quality product to the Birmingham, AL market that's possible; regardless of my limited experience. I'm ready to keep this one for myself a flip it!  Truthfully, I've served in my state as a Realtor or real estate agent (there's a difference) since 2012. I've been very successful in residential sales, single & multi-family property management, and respective leasing and marketing getting timely & reliable results. My clients & customers have been pleased & my name is strong. Now that I'm making serious progress in my creative marketing campaigns I want to pull the trigger... take the leap & put my expertise to work for myself.  Tonight, I'm approaching this community for insight, straight-talk & confirmation. 

About my Company: I've built a full-service realty operation with long-term commitments to effective strategy and the clients that trust me in mind. The foundation of my company is a bit unorthodox, being comprised of timeless principles necessary for any lasting success to be realized. For details on this PM me for a link to the website which is being structured now.  

The deal: A woman, recently divorced, answered my marketing letter; I immediately visited with her and did my initial property walk & offer. I initially contracted the house at... let's just say too much. Once I got solid repair estimates from trusted contractors & subs & performed an objective comp analysis I renegotiated on the dilapidated property. The owner was able to significantly reduce the mortgage amounts using gifted funds from her family members.  I now know that at this price & with the required work I have a respectable deal that will kick-start my redevelopment & investing careers.  Here are the numbers- all else is well documented & ready upon request. 

*Acquisition: $40,000.00

*Soft costs (permits, space planning, utilities, insurance): $7295.0

*Construction Improvements (materials & labor& staging): $97,545.0

*Contingency for mishaps (10.3%): $10,047.1

*Agent Fees @ 6%: $12,900.00 (as stated I'm a licensed agent & MAY decide to list the home myself. Even so my commission will revert back to the spread as a savings of 3%) These #s reflect hiring the right listing agent. 

*Closing Concessions to Buyer(s) @ 3.49%: $7,154.5 >> I've lined up a Title attorney for both transactions.

** ALL IN @: $162,894.5  ( the Scope of Work agreements @ J Scott's & others suggestion are clearly defined) My idea is to bring this property to like new condition with quality craftsmanship- cutting no corners. No "blow & go" b/c this property needs to ride the recent appreciation wave that the area is experiencing. 

** All in that's : 76.4% LTV when ARV/ Retail is calculated at $215K...

*** Low end gross profit: $20,058...... Expected gross: $40,058...... If contg. is used.

*** Low end gross profit: $30,058...... Expected gross: $50,058...... If contg. is Saved.

What I'm asking: 

*Best practices & what to expect when being my own GC....... I've contacted BHM city already; without any post renovation residency clauses they WILL allow me to act as an unlicensed GC  given I submit approved drawings for all work & all work is performed by licensed, boned & insured contractors & subs. This isn't a problem for me since all my repair quotes  & bids come from such. Also, I have significant autonomy with the bank I work for that will allow me to visit the site twice to three times daily during the 3 month reno process.   

* Access to private & or hard-money sources that will allow me to access funds held in escrow on draw based on completion stages of work. As an added bonus I've worked my calculations planning to give my partner(s) the "lion's share" for trusting me and helping me with capital resources.

* Insight into your experiences with rock wall foundations common to southern climates & soil types during 1930s. 

* Insight on this deal as a whole. I want to be sure I'm understanding the micro AND macro perspectives here. 

I humbly thank you all for your feedback and suggestions. For a first project I'm going to be busy; however, I'm not afraid of work & I'm sharp so I'm prepared for this challenge. I have other deals in my pipeline that I need to contract. I want to scale my business in a steady and organic manor so that I can work on my business full time. I'll soon be ready to hire out the bottle-neck roles I'm currently doing myself. 

For anyone on the fence about getting things done for yourself. I give a word.... Get sharp & just do it. Be real with yourself & do all that you can do; outsource the rest cause you might not be the best at that thing. 

- LK Washington

7|Stone Development Group

Sorry I can't help with most of what you want to know.  I can tell you that folks generally say renovations take longer and cost more than expected, so good luck.  ;-)

Thanks for noting there is a difference between a realtor and a real estate agent.  I didn't know that and looked it up.  Now I know the difference between them and a broker too.  :-D

Good luck with everything!  Maybe me commenting will bump up your thread and someone else will answer this time around.  :-)

@Jody Schnurrenberger , thank you for taking a look at my post.  If there's anyway I can help you please reach out to me. 

Since then, I've firmed the larger ticket numbers like roofing, drywall & plaster and foundation; all of which have bids in under my projected cost to implement. My attic space has high ceilings, so finishing that out for a master suite or loft/rec area could be an option as the the project timeline & budget develop. I'm drawing plans for both options. 

Also, people are seeing my deal & starting to request my proposal for private funds; which is good! I wish I had the funds loaded already, but I'm not disappointed that I focused on finding & securing the deal first. I have great rapport with the seller and can hopefully adjust my expected closing date. 

Thanks, @Laurance Kevin Washington !  Right now I'm working on starting direct mail.  I'm only targeting about 100 duplexes (based on location and rental income in Auburn), so I know my chances aren't good, but if you have any advice besides mail regularly, mail different things, and mail 5+ times, I'd be happy to hear.  I'm somewhat worried about what my letters/cards/postcards/etc. will say but I'm REALLY worried about what to say when/if they call!  lol

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