Rehab Journal: Joralemon St. Project (Ride Along)

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Rehab Journal: Joralemon St. Project (Ride Along)

Ibrahim Hughes
Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes

Good morning folks! I'm starting a rehab journal to assist those new to rehabs and give them a bird's eye view of the rehab process from A to Z. We've been in business (collectively) for over 20 years so we've learned, like anything else in business, a lot of it comes down to systems and how organized you are in planning as well as implementation. We just picked this one up in Belleville, NJ and will be doing a complete rehab. All new kitchen, baths, roof etc. as we turn a 3/1 ( bedroom, 1 bath) into a 4/2. Yes architectural plans are needed to add the bathroom. My business partner Sam Colon (he's on BP but having a little trouble with his account - I'll tag him in shortly) is in charge of managing the renovations and designs on our projects. He is currently developing @Brian G. (who also wholesaled us the deal) to become our project manager on renovation projects. This will allow us to continue the company's growth.

We still have a wholesale business (plus a couple of buy and holds) so I'm working with the rest of the team ensuring that we're still generating wholesale revenue (And any one of the deals can possibly become another rehab project for us). Plus I'm responsible for the administrative duties on these projects (keeping the books, BP Rehab Journal plus any backup running around Sam may need me to do).

Our last 2 rehab projects were huge successes and so we were able to bring the private lender from one of those projects onto this one. He's making a great return in one of the safest vehicles out there so he's super excited. You can view our previous projects using the following links:

www.540Trinity.com

www.649Summit.com

So ask away regarding any questions and hopefully Sam, Brian or myself can get to them all. Thanks for reading!

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Jason Fraser
Salt Lake City, UT · Member since 2013 · 164 posts · 73 votes
11y

I'm really interested in following along. I'm a Jersey guy who lives in Utah. I was out in Jersey last week and was driving around and I'm seeing the opportunities.

Are you primarily focusing on rehabbing or wholesaling?

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  • Barbara G.
    Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
    11y

    I think  if you add the costs associated with each step the diary will be more helpful.  How much did the house cost? What are the comps for the finished house?   What is your budget for this renovation? Can you share the break down of the budget?   Is this a BUY, Renovate, Rent and Refinance Project?   (A BRRR)  How much were the 2 dumpsters and the cost of the demo crew? How much are the stairs ETC ETC.  This could really be very helpful following this project from beginning to end.

    Good Luck with this project, you should b able to do well with it.

    0Reply
  • Jacobo B.
    Investor · Miami, FL · Member since 2008 · 20 posts · 10 votes
    11y

    Great project and thank you for posting it. I'm learning a ton with all these but I agree with some people here: can you share the cost of the renovation? If you don't feel comfortable with disclosing everything, at least the cost of repairs can give a general idea of what to expect.

    Thank you again and good luck. 

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    11y

    @Barbara G.

    @Jacobo B. Our rehab budget is $74.2k.  I'll let @Sam Colon chime in on the budget details since he is paying the subs.

    But generally speaking, doing a complete gut rehab with new roof, new siding and all new everything (windows, kitchens, baths, electric, plumbing etc.) can run us close to $85-90k depending on the neighborhood (more $$$ for higher end neighborhoods). We already have siding (just need to power wash) and most of the windows. So we're saving money there but the numbers are still tight.

    I'm glad you along with @Kay Lee find this useful. That was one of our main goals in putting this together.

     And Kay that experience cost us in $$$. It's the best but most expensive teacher in this biz. Still we are grateful for it.

    2Reply
  • Kenneth B.
    Chester, NJ · Member since 2013 · 150 posts · 30 votes
    11y

    @Ibrahim Hughes, any update on construction progress? 

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    First let me sincerely apologize to the bigger profit pockets staff, community (including @Kenneth B. since he actually asked about an update almost 2 month ago) and family for not staying on top of this rehab journal.

    Shortly after my last post, our office manager/transaction coordinator abruptly resigned causing a lot of the administrative load to fall back on me and my business partner. We're in the process of finalizing the hiring of a virtual assistant and sales person which is giving me some time to be able to update you guys on where we are.

    Additionally for some reason I had trouble getting onto the site as I kept receiving error messages that my account wasn't verified. So the couple of times that I did have a chance to get on here to update you guys I wasn't able to.

    Fortunately none of this affected any of the actual rehab projects. Just my time on social media (which isn't good). We've been able to keep our private lenders updated on the status of the project and so I'm now using those updates to bring everyone up to speed on our Belleville (NJ) project (and hopefully educate a few people in the process). So here goes......(will post the remaining updates throughout the day).

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    Weeks 4-5

    We have completed the following:

    • Clean Out
    • Demo

    STILL No permits as of yet and plans were submitted on May 15 (a month ago).

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    Week 6 -7 (July 1) 

    We FINALLY received the permits today (7/1/15) and will resume work IMMEDIATELY as we are way behind schedule. We really expected almost 4 weeks ago. We will start by fixing the framing issues and building our dormer for the bathroom (see below pic - part of the bathroom ceiling slanted so we wanted to fix that) and completing the work needed to pass 'rough' inspections for electric and plumbing (install new wiring, high hats and plumbing - no plumbing appliances needed at this time, just the piping).

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    Weeks 8 - 10.

    We worked our guys pretty hard these last few weeks as we had to address the framing issues and get ready for our rough electrical and plumbing inspections. Inspectors will be out in a couple of days for those 2 rough inspections. However, we are having a few issues with the framing as this house must have added some later additions (like the kitchen) without following code. Laws weren't always followed to a 'T' back in the day so you run the risk of addressing a few framing issues that were never yours once you open those walls (done during our demo phase). Building Inspectors had a few issues with some things that we are correcting (times like these make me wish I could track down the old contractor who put this stuff up 50 years ago and ask for reimbursement of my time and money). So hopefully we will schedule the building inspection by Friday and have the inspection next week.......and PASS.

    Pic of Dormer from the outside:

    Framing Pics:

    Plumbing & Wiring

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    Start of Week 11

    We passed both the plumbing and electrical rough Inspections.

    We also got lucky and the Framing Rough inspection was given right away. We need to update some things that require some extra money and time to bring up to code. We need to reframe one of the walls in the New bathroom on the first floor with metal beams.

    Apparently all walls near a fireplace must be framed in metal. Not sure why they didn't mention that when reviewing our submitted plans, but they requested so we must comply. 

    We have our wall insulation and windows being delivered tomorrow. 

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    Weeks 12 - 13

    Took us a couple of weeks but we passed both the Framing and Insulation inspection (see pics below of metal framed walls mentioned in last update plus a couple of insulation pics). During this period we had a different city inspector visit the house and he requested additional changes to be made:

    We had to add Baffles to the attic sheating (Roof Plywood). (Baffles are foam insulation sheets that create air tunnels behind the actual fiberglass insulation). This is the first time I am hearing this is a requirement for when replacing a roof. However as I mentioned in the past, they requested and we must comply. Added $$$ of course.

    We have all new windows installed and exterior of the house has been painted.

    We currently have the dry wall scheduled to be installed this weekend. After the dry wall is installed we can then move on to the next phase (adding moldings, priming/paint walls).  

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    We concluded the dry wall (Sheet Rock) installation and passed sheet rock inspection. We are now ready for primer and paint. The Kitchen cabinets are on site and ready for installation. Bathroom and Floor tiles (Plus Materials) are all on site.

    This week we will begin to primer and Paint, begin to install the Kitchen, Bath, and Floor Tiles, and start to install the new wood floors.

    We originally were going to refinish all of the wood floors, however after starting to work on the floors we realized that some of the floors don't have enough wood on the broads in order for us to sand down and refinish. Therefore we have to install new wood floors in the areas where we were going to refinish. This will set us back an additional $2500. We originally budgeted $2500 to refinish the Floors, however to install new hardwood floors in these areas would cost us double ($5000). The good news is that we based our numbers on a conservative ARV of $265k. We're now looking at an ARV of $290k - $300k. We're going to start our list price at $309k for a week or so and see what happens. Our broker (we're licensed Realtors who are listing this ourselves) feels that we should list at $319k but we feel that's a little high and we don't want to sit on the market too long waiting for an unrealistic price.

    Additionally, we're having delay troubles with our building contractor as he's moving way too slow for us. We have him on another project in Maplewood so this will be the last time we allow him more than 1 project of ours at a time unless he scales up ad adds more guys. So we're currently on the hunt for a new contracting crew who is reliable, efficient and reasonably priced.

    Now entering the final stages of the renovations.

    Green (water-resistant) sheetrock in all bathrooms

    0Reply
  • Kenneth B.
    Chester, NJ · Member since 2013 · 150 posts · 30 votes
    10y

    @Ibrahim Hughes, it's great to see the progress! When there weren't any updates I thought the worst. The place looks like it's going along nicely. I would love to stop by and check it out in person at some point.

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    @Kenneth B. - sorry But I didn't get to post the final update.   Rushing out of the office. Here it is.  While this project, like any other rehab project, certainly had its up and downs, we were able to get through it with no *major* hiccups.

    We should be doing an open house next weekend so hit me up with a PM so that I can get your contact info and you can come on out.  

    While I'm at it, let me tag a few of the other folks who commented earlier to let them know that I posted updates to the journal between yesterday and today: @Jason Fraser, @Gary Parker, @Chris L., @Garret Chiaramonte, @Mike Sedlacek

    Sorry for the delay guys!

    Weeks 18 - 23

    We are now finishing up the final stages on the renovation. The house is painted and the floors are being varnished today. Tomorrow we will continue to finish up the remainder of the project. We already currently have 90% done. We estimate the property to be completely done, Staged, and listed by the end of this month.

    Anyone who has done this business for a minute will tell you that one of the most frustrating aspects of this business is getting contractors to finish the final stages. They're usually so concerned about the next job that they start slacking up on the current one. Hence we're dealing with that here, hence another cause for unnecessary delays.

    Also, I wanted to get him in earlier like I do all of my projects but didn't get a chance to on this one - I brought the 'Sonphew' (my nephew who I'm raising as my Son) through the house to give him (continued) exposure to investing, construction and business. My biz partner and I bring our children through every project to make sure they understand the concept of building (Give it up For Bob The Builder!) and investing. You can never start them too young. My goal is to start him young on cleanup (At 2 yo I had him do a little sweeping on a couple of projects for me for $1-2. He' 4 yo now), get him trained on basic carpentry/construction and property mgmt. as a teen and eventually investing. The goal is to have him investing for himself by the time he enters college (where I hope he will take up architecture and pursue an MBA). Whatever he decides I'm making real estate investing mandatory since housing is indeed a basic need and investing is now a basic financial survival tool. It's something I strongly believe that everyone should do at least part time regardless of their career choice. So if you have children and are at least looking at houses, bring them along every chance you get. Until next time.

    2Reply
  • Thurmon Cohen
    Real Estate Agent · Orange, NJ · Member since 2011 · 23 posts · 13 votes
    10y

    Looks like a realy nice project. If you are still looking for a contractor, give me a call. You can check us out on Houzz. 

    http://www.houzz.com/pro/thurmon-cohen/flamingo-co...

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    Week 24 ( November 24, 2015 - COMPLETION OF RENOVATION!!!)

    Finally! It took us a bit longer than we had hoped to finish this project. A couple of things hurt us including the time it took to get our permits and plans approved, framing issues from work done by past owners, "miscommunication" with town inspectors and a slow contractor. All a part of the life of a rehabber. But we will be making some changes going forward including revising our contracts with contractors that allow us to go and spend some of their due money to bring another contractor in when they're dragging their feet. Nontheless, I think the project came out pretty good.  And our investors are pretty pleased as well!

    We listed the property this past Thursday the 24th and already have an offer close to asking price. Let's see what the rest of the weekend brings.

    Here's the website for the property for anyone whose interested: 213Joralemon.com

    @Kenneth B. and @Ashraful Karim  - We have an open house tomorrow from 1-4 pm. I think you guys have my cell.  But if not, inbox me and I'll get it to you.

    Ibrahim

    5Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    @Thurmon Cohen - Thanks! please contact @Sam Colon as he is the one who primarily deals with the contractors.

    0Reply
  • Raphael Gomez
    Realtor · Newark, NJ · Member since 2015 · 27 posts · 8 votes
    10y

    It is AWESOME what you are doing here. If it's ok with you, I would love to come by the open house and take a look. If nothing else, it will serve greatly as inspiration.

    Two thumbs up!!

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    Rafael stop on by!

    0Reply
  • Davon Lowery
    Investor · Whitttier, CA · Member since 2015 · 405 posts · 110 votes
    10y

    Nice job, thanks for sharing, I LOL about the grass. It's like, "we just have to get him on something".

    How much was your total rehab budget, and the spread if you don't mind sharing.

    Keep up the good work.

    0Reply
  • John Weidner
    Chicago, IL · Member since 2014 · 710 posts · 200 votes
    10y

    @Ibrahim Hughes

    I've never seen a carpenter pre build stairs off site then hoist them in place.  I've always done on site build. 

    Any reason you took this tactic for the stair build?

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    @John Weidner - We get a good price which makes it better for us to have the guy bring them in instead of assemble on site. Also more cost effective. The gentlemen we use charges us 50 bucks a step. Which is slightly above the cost of material. Also it would take two guys a full two days to build the stairs and assemble. Not to mention the space and obstructions it causes on the work site.  If it's simple basement stairs we do on site. But interior stairs that require trim work and a combination of oak and pine we outsource.

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    @Davon Lowery -  Thanks. 

    House was purchased for $110k

    Rehab done at $90k

    House is listed for $310k and we accepted an offer close to asking (cant disclose until it closes).  I think we could have gotten a bit more but didn't want to chance it with the holidays coming.

    0Reply
  • John Weidner
    Chicago, IL · Member since 2014 · 710 posts · 200 votes
    10y

    @Ibrahim Hughes

    Congrats on the contract.  

    0Reply
  • Davon Lowery
    Investor · Whitttier, CA · Member since 2015 · 405 posts · 110 votes
    10y
    Originally posted by @Ibrahim Hughes:

    @Davon Lowery -  Thanks. 

    House was purchased for $110k

    Rehab done at $90k

    House is listed for $310k and we accepted an offer close to asking (cant disclose until it closes).  I think we could have gotten a bit more but didn't want to chance it with the holidays coming.

     awesome man. Congratz!!!

    0Reply
  • Ibrahim Hughes
    OP
    Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    Thanks much @John Weidner and @Davon Lowery! 

    (this is really for the new folks out there)  Now we have to get over (what I call) 'the 4 hurdles of retail' buyers in order to seal and close the deal:

    1) Attorney Review - the stage where the 2 attorneys hammer out the legal details of the purchase and sale.  We've seen a good deal die here and there.

    2) Home inspection - We fix whatever comes up in a home inspection on our rehabs. We just hope it's not something major.  Hasn't happened yet. And it really Shouldn't be on a complete rehab.

    3) Appraisal - House has to appraise for (at least) our purchase price. We don't see an issue with this.  But still......no guarantee.

    4) Mortgage commitment - Buyer was preapproved.  But we won't know if they really qualify for the mortgage until the lender checks all of their financials along with the details of the purchase.  The issuance of that mortgage commitment is usually the last hurdle.

    1Reply
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