Just completed our first rehab!

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Just completed our first rehab!

Jonathan Bonck
Investor · Houston, TX · Member since 2015 · 57 posts · 21 votes

This is our first full rehab. We are trying to use the BRRRR strategy. So far we have bought, rehab, and its on the market for renting. Then we will refinance after 6 months and repeat!!

This is in the Southeast area of Houston, TX. 10 mins from where the Houston Texans play at NRG stadium and 10 mins from the University of Houston.

We found this property on the MLS and were able to make a low offer and negotiate further until we got the right purchase price.

We raised $75K from a close relative with a promissory note of 10% annualized interest, which will only be 5% after refinancing in 6 months.

It took 6.5 weeks to rehab. Everything was completely remodeled.

This was a 3 bed, 1 full, 1 half. We turned it into a 5 bed, 1 full, 1 bath. Turned formal dinning room into a bedroom because this market area is not a formal dining room market. Then the back room was massive and we split it into two rooms an added closets. 

Purchase Price: $40K

Rehab: $35K

ARV: $110K

Rent: $1400/month

Cash flow: $450/month

If we cash out refi at 6 months we should be able to pull out $82,500 to pay back the principal and interest on the private capital we raised. 

Cash flow is after saving for all expenses ( capex, maintenance, vacancy, insurance, etc.)

Pics below:

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Andrew K.
Rental Property Investor · San Antonio, TX · Member since 2011 · 266 posts · 158 votes
9y
Good job with the rehab Jonathan Bonck , the place looks great. It's frustrating to hear about the appraisal, but it's awesome you were able to pull out most of the capital. I'm sure the next deal will be even better! Keep us posted. -Andrew
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  • Malik Roley
    Houston, TX · Member since 2013 · 30 posts · 2 votes
    10y
    Nice renovation Jonathan Bonck . Where did you find that deal? -Malik
    0Reply
  • Kami S.
    Sugar Land, TX · Member since 2016 · 69 posts · 79 votes
    10y
    Jonathan Bonck this is awesome! Good work, I can't wait to find my 1st deal.
    0Reply
  • Tristan S.
    Rental Property Investor · Boone, NC · Member since 2015 · 291 posts · 88 votes
    10y
    Jonathan Bonck congrats! How did you initially estimated the rehab costs? Who did you use for your contractor ? How close did you end up being from your initial estimate? Thanks
    0Reply
  • Chuck Webb
    Houston, TX · Member since 2011 · 115 posts · 70 votes
    10y

    Good job making your money on the front end.  I'm having trouble finding a 70% 'er to get into.

    0Reply
  • Garrett Diegel
    Rental Property Investor · NV · Member since 2014 · 241 posts · 85 votes
    10y

    Looks great! I have to ask though, since I am new to REI also.

    What lessons did you learn from your first flip? What would you do again and what will you NOT ever do again?

    0Reply
  • Jonathan Bonck
    OP
    Investor · Houston, TX · Member since 2015 · 57 posts · 21 votes
    10y

    @Malik Roley I found it on the MLS through HAR. It was listed for $50K. But I made an offer for $42K. Then after inspection I renegotiated back down to $40K.

    @Tristan S. Thanks! I walked the property with my GC. He name is Eric Newman. Runs a construction company called "salt and light construction". Search and you can find more on google. We had a good bit of equity in this house. We initally thought $30K but ended up at $35K. But becuase it had so much equity Ill stil be able to refi with no issues.

    @Chuck Webb I completely understand. It took be 2-3 months of looking and making offers to find one I could actually use the BRRRR strategy on. Keep looking!!

    1Reply
  • Jonathan Bonck
    OP
    Investor · Houston, TX · Member since 2015 · 57 posts · 21 votes
    10y

    @Garrett Diegel Most important thing I learned it to have an EXCELLENT TEAM. I work full time in a corporate job. Im thankful to have lots of help when it came to inspecting, closing, rehabbing, and now leasing it out. Build your team. 

    I would prefer something that didn't take 6 weeks to finish. That's a lot of holding cost. 

    0Reply
  • Chuck Webb
    Houston, TX · Member since 2011 · 115 posts · 70 votes
    10y

    If you have time, could you provide a punch list of the items that required repair or replacement?

    0Reply
  • Mo Sheikh
    Investor · Houston, TX · Member since 2015 · 29 posts · 18 votes
    10y

    Congrats @Jonathan Bonck, the first one is the toughest! You guys did a great job on the rehab, keep us posted.

    0Reply
  • Karen O.
    NYC, NY · Member since 2016 · 617 posts · 456 votes
    10y

    Nice job.  On to the next one.

    0Reply
  • Liam Barnes
    New York City, NY · Member since 2016 · 15 posts · 4 votes
    10y

    Congrats. Really inspiring. You have done what I want to do. Houston is one market I'm keen to get into. As you say finding a great team is critical. 

    0Reply
  • Shanequa J.
    Realtor · Houston, TX · Member since 2011 · 916 posts · 296 votes
    10y

    How long had the house been on the market?

    0Reply
  • Alex Saleeby
    Rental Property Investor · Beaumont, TX · Member since 2015 · 161 posts · 77 votes
    10y
    Congrats Jonathan Bonck !!
    0Reply
  • Norberto Clemente
    Houston, TX · Member since 2015 · 6 posts · 1 vote
    10y

    Oopps, just found the answer to my question right after asking. Great finding though, rehab looks great as well. Congrats!

    0Reply
  • Denise Mayo-Walley
    Investor · Sugar Land, TX · Member since 2013 · 71 posts · 26 votes
    10y

    awesome and inspiring! Can you share how you plan on refinancing? Small local bank? Large bank?

    0Reply
  • Jonathan Bonck
    OP
    Investor · Houston, TX · Member since 2015 · 57 posts · 21 votes
    10y

    @Chuck Webb Here you go!

    Exterior
    Demo all damaged siding, trim fascia, windows, roof shingles, etc.
    Patch in all siding, trim and fascia as needed
    Repair all cracked mortar in brick areas
    Replace single panes of glass at all broken windows
    Reseal all exterior windows and doors
    Paint all siding and trim - excludes brick. 1 siding color and 1 trim color
    Patch and seal roof in all necessary areas
    Electrical: Update panel box to Code
    HVAC: Install condensor unit and concrete pad
    Interior
    Demo all interior - Flooring, trim, countertops, bath fixtures, electrical receptacles, etc.
    Framing: Frame new walls for master bath, new walls for master closet, close in pass-through
    at master bedroom, frame new walls for 2 bedroom closets at left side, door opening for rear
    left bedroom, frame in pass-through at kitchen
    Electrical: replace all outlets and switches and cover plates. Install all new light fixtures
    throughout.
    HVAC: run new 2 ducts for master bedroom and master bathroom
    Drywall: Install all new drywall at all new walls. Patch all visible cracks throughout entire
    home, replace any drywall necessary.
    Trim: install new window stools and aprons, new interior and exterior doors, baseboards,
    closet shelving, casings on wall openings at pass-throughs, new door for rear left bedroom,
    new door for master bath, new door for master closet, replace damaged or missing doors.
    Repair and rework existing kitchen cabinets.
    Build new cabinets
    Flooring: install new laminate flooring in all living areas and halls. Install new tile in kitchen
    and baths. Install new carpet in bedrooms.
    Texture: Retexture entire home after all new and patched drywall
    Paint: Paint entire home. 1 ceiling color, 1 wall color and 1 trim color. Paint
    Hardware: Install new doorknobs, doorstops, towel bars, paper holders, cabinet hardware, etc.
    Appliances: Install all new appliances. Appliances not included.
    Countertops: Install new granite countertops in kitchen
    Baths: Install new tub/shower combo, install 2 new vanities w/ tops
    Building Permit Fee
    Dumpster and Disposal Fee 
    2Reply
  • Jonathan Bonck
    OP
    Investor · Houston, TX · Member since 2015 · 57 posts · 21 votes
    10y

    @Shanequa J. It was only on the market for about 10 days. It was foreclosed on a year before I bought it. It was vacant and empty. An investor had bought it with the intention of fixing and flipping but never did anything after holding it for 1 year. Then he listed it on the MLS. He wanted to get rid of it quickly.

    @Denise Mayo-Walley I will refinance using a local bank. They will loan out up to 75% LTV for my first 4 refinances. These will be fannie mae products. 30 yr conventional at fixed rate.

    0Reply
  • Jose Martinez
    Wholesaler · Houston, TX · Member since 2015 · 78 posts · 30 votes
    10y
    Jonathan Bonck what a great success story, congratulations on your brrrr!
    0Reply
  • Jonathan Bonck
    OP
    Investor · Houston, TX · Member since 2015 · 57 posts · 21 votes
    10y

    Thank you both! @Jose Martinez @Alex Saleeby

    0Reply
  • Kai Kopsch
    Real Estate Broker · Charlotte, NC · Member since 2016 · 569 posts · 351 votes
    10y

    Jonathan, congrats on your first rehab very inspiring 

    0Reply
  • Jonathan Bonck
    OP
    Investor · Houston, TX · Member since 2015 · 57 posts · 21 votes
    9y

    UPDATE

    Hi Everyone,

    Just wanted to give a quick update. We just closed on the cash out refinance. Learned a lot through this process. The appraiser that was assigned to our refinance gave an overly conservative appraisal. It came back at $103,000. I was frustrated. I ran comps again and showed it to the loan officer I was working with. He sent them over to the manager of the appraisal company. But the manager stood by his appraisers decision. Not sure if this is a trend going on in Houston. But the week before closing they did come up to $104,000. 

    I was able to pull out $78,000. So this ended up making me come out of pocket around $3-5K. 

    I would still call this a very successful rehab and refinance. Next time I will get better! 

    4Reply
  • Andrew K.
    Rental Property Investor · San Antonio, TX · Member since 2011 · 266 posts · 158 votes
    9y
    Good job with the rehab Jonathan Bonck , the place looks great. It's frustrating to hear about the appraisal, but it's awesome you were able to pull out most of the capital. I'm sure the next deal will be even better! Keep us posted. -Andrew
    1Reply
  • Hongbing K.
    San Diego, CA · Member since 2016 · 46 posts · 13 votes
    9y
    Nice job! Even though you didn't get all your money out I also believe this is was a pretty BRRRR. You didn't have a huge loss and you were able to end up cash flow the property. Keep it up! I want to do the same thing like you did but I don't want to out up so much capital in the beginning. My market requires a fairly big capital to begin with.
    1Reply
  • Alnise O.
    Virtual · Member since 2009 · 20 posts · 4 votes
    9y

    Thank you for sharing your  experience with us. The rehab job looks great. Just as you said as far as the cash out refi... you'll get even better. 

    1Reply
  • Jonathan Bonck
    OP
    Investor · Houston, TX · Member since 2015 · 57 posts · 21 votes
    9y

    @Hongbing K. Great for you! I'm in Houston and the equity spread in most deals are pretty tight. so you will have to put some skin in the game. But you can find deals where your cash out of pocket is at the minimum. 

    0Reply
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