My offer on this short sale property got accepted by the bank 3 days ago. Got the inspection and house is in good condition in general. I'm under 10 day- due diligence period. I met 2 contractors so far and they're $15k off from each other. My numbers and SOW is as follows:
1. Replace old kitchen with new cabinets and granite countertops.
2. Replace kitchen appliances
3. Change existing backsplash and kitchen flooring.
4. Refinish hardwood floors on first and second level.
5. Replace quarter round all throughout the house. .
6. Replace old boiler system with new HVAC unit and put new ductwork.
7. Put exhaust fan on 2nd floor bathroom.
8. Recaulk bathtub
9. New toilet, vanity mirror and sink on second floor bathroom.
10. Replace door knobs and electrical outlets all throughout the house.
11. New paint interior of the house
12. Put new recessed lighting in the living room.
13. Replace carpet with LVP flooring in the basement.
14. Place drywall in the basement after painting with waterproof paint on the walls.
15. Redo basement full bath
16. Replace water heater
17. Change 100 amp electrical panel to 200 amp.
18. Remove bushes and couple trees around d the exterior of the house.
19. Repair porch and repaint porch shade.
20. Remove rotten shed.
21. Replace plastic covers on windows.
PP- 99000 conventional financing, 20% DP 19800
Closing Costs- 5000
Rehab Cost 35,000-40000
Rent- 1500 x 12= 18000
Property Taxes- 2912
Loan- 79200 @ 5.625% (PITI 773.59×12= 9283.08)
Repairs- @ 8% 1440
Capex- @ 8% 1440
Vacancy- @ 8% 1440
PM- @10% 1500
18000- 15103.08= 2896.92
2896.92÷12= 241.41( monthly cashflow)
With all these repairs, is $50k a reasonable quote? What about $13500 for the whole HVAC system w/ ductwork? And also I think I overpaid on this 2nd rental although I have positive cashflow. What do you think of the numbers? Calling all Baltimore rehabbers here for feedback before my due diligence period ends. Thanks!
@Vina Real I typed this huge response and lost it. You have some big items on your list and some things are missing based on the work. I think the quote is a little low. Consider the things you absolutely need and make aure you have a contingency. Best of luck!
I also think that is a very low price . The hvac price with ductwork even seems low . My question is if this is a row home , how will they hide the ductwork ?
Also the heavy up will require wires to be snaked through existing walls and ceiling. There is no mention to the repair work required.
The boiler system is actually still working and I'm contemplating if I should replace it with central air/heating or keep it as it is.
All new duct work? Heavy up? How do you get around tearing out the walls? Depending on how intense and unforeseen issues, that can bite out a huge chunk of 50k alone.
I think your reno price is fine, depending on who is doing the work. I would be right around that price range.
Actually I have been to that house couple times, so depending on what your price, it will be a nice one. However, if you are renting you are spending too much, and $1500 will be the best case scenario I think.
@Vina Real how is this rental doing now? How did the rehab work out?
@Vina Real Your cash flow seems a bit tight at ~$241/mth and ~5% cash on cash return. Ideally, you'd want to a bit higher return and more cash flow. Depends on your investment criteria. Good luck!
Here's my latest numbers:
PP- 99000 conventional financing, 20% DP 19800
Closing Costs- 12700
Rehab Cost $43000
Loan- 79200 @ 5.5% (PITI= 707.55)
Rent 1700, listed for rent at 1500 but was offered 1700 by one tenant
Repairs- @ 8% 136
Capex- @ 8% 136
Vacancy- @ 8% 136
PM @ 10% 170 ( self managed)
1700-1285= 415 monthly cashflow
Great tenants, always on time and easy to work with.
I think this is a solid deal that will allow you to do a cashout refi to get most of your out of pocket cash back. I would love to pick something like this up too, so please message me with any leads.
I search the MLS for deals and then I reach out to my realtor when I find something good. I'm still a newbie and don't have the system to find deals on my own yet.
@vina real, did you stick with your initial repairs? We’re you able to get the initial list of work done at the $43,000?
P.s. I’m in my initial research phase to learn more before I enter into investing. This post provides a ton of value, so thank you!
@TyroneHansboro The contractor I picked quoted me 35k initially but total was 40,200 + appliances 2800. I learned a lot of lessons from this rehab:
1. Build a strong scope of work. I should've made an itemized pricing of repairs instead of as a whole package. I noticed the contractor tried to add things to be done in addition to the original SOW.
2. Visit the site when they least expect it. I should've but I didn't because of my work. I always went there on the weekends so I didn't know how the contractor and the team worked. In the end it resulted to a warning from the citt because of the trash pile in the backyard. Bad management from my part.
3. One blooper that the contractor did was expanding the basement bathroom shower without checking if there was a real drainage outlet. We had to redo it and cost us 1500 worth of repairs.
The rehab was a month late and also missed the mark for summer rent. The good thing that happened was I found my handyman thru this contractor. They say that sometimes people come to our lives for one reason and to me that was this handyman. I also found my reliable realtor thru a person that I had a bad experience with lending. I have more lessons to tell but this is getting longer. I hope this post helped you a bit.
@Vina Real thanks for the reply and additional information. I'll keep these things in mind when my time comes. Glad it worked out for you and wish you continued success in the business.