Ambler, PA SFR Complete Reno + Second Story Addition pic diary

6 Replies

Hello All,

I wanted a place to track the progress of this project so I thought this might be a good spot. Ill have to take a post or 2 to bring everyone up to speed as to what we've been through to get to this point but in due time. We broke ground last week and the house was completely gutted, roof torn off and we are preparing for the framers next week. I will read through a few other diaries to try to find some kind of format to follow through this but for now I'll post some photos and let them do the talking. Wish us luck. We looked at this property in February and signed the JV agreement with the owner in March, and only last week were we finally able to break ground. The township was a bear with permits, plans, and zoning variances but here we are. I'd be willing to bet that process weeds out 90% of people who want to invest but just can't get through the red tape. Again, I'll explain what we did and how we got here in another post, but it sure does feel good to see the fast progress and cut 2-3 checks a day as the guys work through the project.

A little detail about the project. I am the project manager and equity investor in this deal. We are working with the owner and a general contract. We are gutting the current structure a 1050 sq ft SFR and we are adding a second floor with a small cantilever to add about 1100 more sq ft and a second story, Its a nice single family on a standard lot for the area but it sits on a corner, and is directly across from a township park which adds a ton of value in my opinion. We partnered with the seller by agreeing value for the as-is asset, then we are splitting the repair expenses, and finally splitting the profit (or loss) once we finish and sell. With that said, I feel it spreads the risk a bit in the event there is a loss. We also didn't need to transfer the property, nor did we need the amount we agreed on, we will pay him that at settlement from the proceeds, so we saved time and money and once again reduced our exposure to risk. as well as didn't need to use funds or borrow money to Lastly to spread the risk a little more we have incentivised the general contractor with a share in equity if he stays on schedule, on budget and performs a great job. He's then motivated to find the best prices possible, and do things to the home that add value or save cost since his pay is directly related to the sale price of the home, not just finishing the work.

Here is an example using estimated round numbers to show how the deal is structured.

$120K  -  Value of property if sold as is, minus all closing costs etc.

$170k -  Reno Budget

$10k   - Carrying costs

$300k all in cost

$450k  - Current comps on the street

$420k  - net after closing costs.

Pay back reno budget

Pay seller 120k and carrying costs.

$120k profit left over.

This diary will be a great way to show how all of these estimations pan out in the end.  We always take the highest number when talking about budgets and we always take the lowest number when looking at comps and sales price.  This way we know what to expect.  The other way around can cause some heartache when things don;t go as planned.   I know for sure we will have at least 10-20k in expenses or sellers assist to the buyer or whatever it might be, so our calculations show $120k profit but we are planning ahead on only ending with $100k.   Iv been doing this for about 6 years now and if Iv learned anything its that if you take the worst case scenerio and make it even worse, then take another 20% off of that, and your still left with a number that meets your investment criteria, then you might have a deal.  SO many times Iv seen others run numbers in the best case scenerio and then pad them just a bit to make them look better to investors only to be left with pretty much nothing in the end because no matter what its always closer to the worst case then the best case estimates.

Thanks and I look forward to the journey!

Here is a link for now as I try to learn how to sort and post the photos to the thread.

Pictures

I’m excited to read about your project as this is in my neck of the woods. I’m a newer investor with a focus on buy and hold. I️ do think it would be great to do some flips to generate capital. Would be great if we could connect at some point.

Originally posted by @Karen Johnson :

I’m excited to read about your project as this is in my neck of the woods. I’m a newer investor with a focus on buy and hold. I️ do think it would be great to do some flips to generate capital. Would be great if we could connect at some point.

Absolutely Karen.  Message me if you would be interested in stopping by the house for a walk through.  

New photos added.  Framing is done and roof is on.  Exterior guys will be by tomorrow to start the stucco.  

Project Photos

Originally posted by @William C. :

New photos added.  Framing is done and roof is on.  Exterior guys will be by tomorrow to start the stucco.  

Project Photos

 Looks great. I know exactly where this is.  I just finished a similar project re-framing a house on a existing foundation.  Looks like your right on track to get sealed in before the real snow comes.

Project is complete. I will update with final photos and details shortly. We are having an open house this Sunday from 1-3 if anyone local wants to stop by and see it.

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