Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
I helped a client, @Martin Yung, buy this home in Raleigh, NC back on November 19, 2015, managed a light rehab, and got it rented. The tenant moved in on January 1st, and I wanted to document the process for my fellow BP members.
Martin lives in Singapore, so he wasn't able to be here for any of this process. He closed from across the globe and just deposited funds in my account for rehab as I needed them. The rehab took a little longer than I hoped. Apparently, people don't work that hard over Thanksgiving, so scheduling contractors was not as fast as it normally is. However, a benefit of rehabbing over this time period, is we got a great deal on stainless steel appliances on Black Friday. It took about four weeks to have it rent ready, with a total holding period of six weeks from the time it closed to the time the tenant moved in.
The numbers are:
Sales price - 95,000
Closing costs - 2,000
Rehab - 9,000
Rent - 995/month
One of my favorite things about this home is that it's close to the NC State Farmer's Market. There is a large, 306 acre, property next to that that was just sold from the state to the City of Raleigh, so the future development potential in this area looks promising.
the investor from Singapore scored big when he found a trustworthy person like u. this is a light rehab.
I'd immediately change that color on the walls. actually, what color? looks white, like an apartment building. u can get higher rent when u have color on the walls.
Thanks to biggerpockets, I know @Dawn Brenengen through BP. I actually flew to Raleigh and meet up with her and check out the city. I love the energy in the city. And of course thanks to Dawn who diligently find good deals and overseen all the rehab, renting and management of the property. She is indeed very trustworthy and the communication is timely.
@Ayodeji Kuponiyi, As I am so far away, I prefer stability with lower return. I am budgeting 8% repair, 5% vacancy, 5% CAPEX, 8% management fees, $1,200 property tax per year, and $550 insurance per year. Since there is no mortgage, the CoC return is around 6-7%
Dawn Brenengen First, congrats. It came out beautiful. It's a major turn out. Question, did you come to the table with personal funds or a HML? I would love to work with you in the near future.
@John Davis - Closing costs can easily run 5k, depending on the price of the home. Origination fees are around 1%, appraisal is $400, lots of miscellaneous fees + $800 for the closing attorney. It adds up, and our average sales price is around $250k
@Dawn Brenengen Thank you for sharing your success story. We are working to do the same thing in and around Raleigh. Everyone is telling us finding leads on MLS are a thing of the past. How do you find your homes, and do you have a general contractor you suggest? We love our current realtor, but would like to build a team of realtors, wholesalers, and contractors.
@Candace Berry - This one was bought off MLS. It's competitive on MLS, but there are still some good buys if you are patient. You should connect with @Account Closed - I don't know of any REI clubs, but there are associations like TREIA. We also have the monthly meetup of BP members on the last Thursday of each month. Definitely come meet everyone at the end of the month.
Very impressive job @Dawn Brenengen! Looks great. I have no idea of how much renovation I should do on my purchase of a duplex. First property ever so I don't want to over do it. I love the floors, what was the price per sq ft? Awesome counters too, what did you use for them? Thanks for the tips!
@Candace Berry - Definitely. Are you mainly interested in flipping or owning some longer term rentals?
@Cody Barrett - Part of rehabbing for rentals is keeping durability in mind. The laminate floors looks nice, but they also are very durable. Carpet has to be cleaned between every tenant, and it has to be replaced every so often, but these floors should last forever. The material was about $2/SF, and install was wrapped in with my painting, but it was probably about another $1/SF. We used granite for the kitchen, but it's such a small kitchen that it wasn't too expensive - $1500, I think. Granite is also very durable, of course.
@John Davis organizes it, and will post a notice when he has the location settled.
@Dawn Brenengen We are interested in a balance of both. Our goal this year is to flip just enough to acquire the cash we need and hold once we've reached that point. If the price/rehab is right, we would like to work with two homes at once, more as we grow. We are considering the BRRRR method, but will have to flip some for direct profit in the beginning.
@John Davis Where on the BP site is the last Thursday info posted for our area?
@John Davis - It was a cash purchase, so closing costs were minimal.
@Aaron Montague - Annual return should be about 8% - assuming 1000/year in repairs, 1500 taxes and insurance, 8% management. Someone check my math.
@Scott Schultz - Closing costs can easily run 5k, depending on the price of the home. Origination fees are around 1%, appraisal is $400, lots of miscellaneous fees + $800 for the closing attorney. It adds up, and our average sales price is around $250k
Great for you and your client!
May I ask, with a cash purchase, what are the closing costs? I can only think of one thing that would not be a cost and that is the "lenders" title policy that the buyer pays for. Since there is no lender there is no policy - correct?
@Daria B. Costs were about 2000. That was mainly paying the property taxes for the rest of the year and the attorney fee. There was also insurance and recording fees, etc. There is still an owner's title insurance policy, but you're right, no policy for the lender.
@Daria B. Costs were about 2000. That was mainly paying the property taxes for the rest of the year and the attorney fee. There was also insurance and recording fees, etc. There is still an owner's title insurance policy, but you're right, no policy for the lender.
thank you that's good to know when I do a cash offer and it gets accepted, there will not be anything different than what I've been involved in thus far.
Dawn Brenengen that's a great acquisition deal...how tight is that ConC return? I say that because I am exploring the option to open up other market and many of my partners have suggested I should take a look into the Raleigh area more deeply...If I can stick with: min of $20sqft to a max of $35sqft on a min of 1200sqft asset with the max repairs of 7k and a ConC roi of 11% (50% of net income goes to expense) I would like to see what you might have available
the investor from Singapore scored big when he found a trustworthy person like u. this is a light rehab.
I'd immediately change that color on the walls. actually, what color? looks white, like an apartment building. u can get higher rent when u have color on the walls.
@Arianne L. It's Agreeable Gray by Sherwin Williams....very agreeable color :)
@George P. We didn't repaint the whole house. Much of it is white, but the color in the kitchen and baths was changed. The family room and bedrooms are still white, but as they need to be painted, they will be changed to the gray too.