Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
I haven't been around much the past 2 weeks, as I've been finishing up the rehab Marty Boardman and I have been working on in the Milwaukee suburbs. After 40+ rehabs in my local area (Atlanta), Marty and I decided to venture into a new market together and give long-distance rehabbing a try.
It was quite a project -- the largest I've ever attempted, both in terms of scope and budget. But, the results were great. We took an early 70s house that others considered a tear-down (according to my listing estate agent who had brought some other investors through the house when it was listed for sale earlier in the year) and brought it back to life.
It won't be a home run (purchase of $150K, rehab of $120K, listed for resale at $340K), but for a first long-distance project, we'll take it. We've had two showings on the first day after listing, and the feedback was great...hopefully we'll get it sold sooner rather than later.
And our second Milwaukee project is now under contract to purchase, just three doors down from the first. We close on it in 2 weeks and will be starting the rehab right after Christmas...
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
13y
There was a TON of stuff built between 1940 - 1960 in Milwaukee. You do find some older, and of course there are newer homes too. Especially the area where I live, right in the fifties, they started putting up homes like gangbusters for families with men returning from the military. Almost all the rentals I have are from 1949 - 1959. The one exception is from 1926. When I renovated it for renting out, the upstairs bathroom sink was a Kohler with a date stamp on it from 1915. Now that's some history!
Milwaukee may not be the best for flips, but rentals is a whole different story, especially on the Northwest side.
My 3 most recent rentals:
$25K purchase, $10K renovation, rented out at $800/month
$23K purchase, $2k renovation, rented out at $875/month
$24K purchase, $15K renovation, rented out at $1100/month
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
13y
Wow, that was a major rehab. What was the biggest takeaway from doing a long distance rehab? Biggest surprise? Obviously going long distance didn't scare you away since you are doing another. Do you think you'll have problems selling this in a cold weather city in December?
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Earl G.:
Very nice rehab job.
How long did it take from start to finish?
Because this was our first long-distance rehab, it took much longer than it should have. After closing, we spent a month doing design, architectural drawings and getting permits. We then spent about 16 weeks doing the rehab.
Had this been a local project, it would have taken 10-12 weeks instead.
So, it was definitely a long project compared to what we're used to.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Jon Klaus:
Wow, that was a major rehab. What was the biggest takeaway from doing a long distance rehab? Biggest surprise? Obviously going long distance didn't scare you away since you are doing another. Do you think you'll have problems selling this in a cold weather city in December?
There weren't any major surprises, but a lot of reinforcement about things I already knew/suspected. Having a great team that can work independently is tremendously important; we were lucky that all our contractors turned out to be very professional, reliable and trustworthy, which went a long way towards ending up with a quality rehab.
The biggest takeaway is that there is NO WAY I could have done this successfully had I not had many rehabs under my belt already. I couldn't imagine starting my rehabbing career with long-distance projects -- it would just be too difficult, time-consuming, stressful, etc.
As for selling, there's a chance we'll have to wait until Spring to sell, but the weather is still pretty mild right now, so hopefully we'll have a bunch of showings before the snow hits, and maybe we'll get lucky. Our agent tells us that we'll either get a quick sale (before Xmas) or will wait until March. I'm hoping for the former, but am prepared for the latter. :)
Investor · CA · Member since 2012 · 170 posts · 28 votes
13y
Nice job J. Looks frickin' slick! Hope the long distance endeavor ends up treating you well, and someone buys it as a new christmas gift for themselves
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Bryan A.:
looks great J Scott...did you have to do any waterproofing of the basement? if so, do you mind detailing it? thanks :)
With the exception of mold, this house had pretty much every problem you could imagine... :)
The question about the waterproofing brings up the most important point thing we learned on this first long-distance project -- every area is going to have their own specific set of issues that you'll start to face. Yes, this house had basement/foundation problems, and had the house been here in Atlanta, we probably would have passed on it due to those issues.
But, in Milwaukee, the entire city is built on clay, and about 80% of houses that are over 25 years old have foundation problems. Buyers expect these problems, and if you fix them (and get a warranty), buyers consider it a plus, not a negative (here in Atlanta, any foundation problems are a negative, even if they're fixed).
So, that was a big learning experience for us...
When we purchased the house, it appeared that one of the walls was severely bowed due to settling and static pressure (water pressing from the exterior onto the wall). The previous owners had done some haphazard remediation -- installing drain tile and putting up some under-sized beams to stop the bowing/deflection of the wall.
We brought in a foundation company to excavate the exterior of that wall, straighten it, tuck point, and then brace the interior with steel beams. By the time we were done, the wall was better than new (for just $7000 :).
Here is what the wall looked like after the foundation work was done:
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Jon Klaus:
Wow, that was a major rehab. What was the biggest takeaway from doing a long distance rehab? Biggest surprise?
Jon Klaus -
In answer to your question, the budget (and overages) were the biggest surprise...we ended up being $25K over budget on this one, for a total rehab cost of over $120K.
Here is how...and why...that happened. And how I can hopefully learn from it in the future:
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Tony Salazar:
Great work like always J Scott!
I am curious why you ventured out of your local area?
Several reasons:
1. It's been getting more and more difficult to find great deals in our own area, so this gave us an opportunity to keep busy;
2. We wanted to partner with another investor from another state (Marty Boardman) and decided to find a "neutral" location that was about equal travel time for each of us;
3. We are considering moving to a new state in the next couple years, and this gave us the opportunity to learn about investing in new areas, get some experience building a new team and gives us the opportunity to figure out if we can move someplace where flipping wouldn't be very lucrative (if we could still flip long-distance in places where it was).
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
Nice job J, rehab looks good. Big mistake getting rid of the pink room, that will likely kill your resale value! :)-
Question for you, based on the much longer hold time and heavier rehab, will you make sure your spread is thicker on the second as your first looks to be all in at 80%? Particularly for long distance where you have travel time and costs, it looks tighter than most of your local and lighter rehabs.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Will Barnard:
Question for you, based on the much longer hold time and heavier rehab, will you make sure your spread is thicker on the second as your first looks to be all in at 80%? Particularly for long distance where you have travel time and costs, it looks tighter than most of your local and lighter rehabs.
Will Barnard -
Unfortunately, we probably didn't learn enough... :)
We're closing on our second Milwaukee property next week, and it's about three doors down from the first.
Our second deal is pretty thin also, but it will be a *much* simpler rehab. There are several reasons we decided to go with the deal despite it not being great:
- We love that neighborhood, and having a second house just a couple doors down from the first means that the rehab and sale should be a bit easier -- we know the neighbors, we'll be able to pre-market, our contractors are close to the area, etc.
- We wanted to show our contractors we were serious about investing up there, and by getting another project (relatively) quickly, they believe that we're going to be doing a good bit of work and hopefully their prices and work ethic will reflect it.
- Our agent is awesome and we want to build a long-term relationship with her. She is a colleague of the listing agent for the second house and did a great job of getting us a significant discount on the purchase price (to make it a decent deal) -- we want to prove to her that we're serious about buying more properties so that she keeps bringing them to us.
- Things in Atlanta are still a bit slow, so I'd rather have the money working on a thin project than no project at all.
Marty just got his RE license up in Wisconsin, so hopefully we'll be finding a lot more -- and better -- deals in the near future...but this one should at least keep the momentum going with us, our contractors and our agents.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
I see, I did not realize you were having such a tough time getting new deals in Atlanta.
Perhaps when we both have some time, we can chat via phone as i had a similar problem here with the new competition, but have found a way to "beat the system". Perhaps you could it it there too.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Will Barnard:
Perhaps when we both have some time, we can chat via phone as i had a similar problem here with the new competition, but have found a way to "beat the system". Perhaps you could it it there too.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Tracey Williams:
Jason,
Great job!
How often did you and your partner had to travel to the property?
Hi Tracey,
The first project required a lot of on-site attention. From the time we purchased the property in July until the time we completed the project last week, I made 7 trips for a total of 24 nights. My partner joined me on several of those trips, though we likely could have accomplished the same amount of work if just he or I had been there alone.
Of course, this was a big and complicated project, so that factored into the excessive traveling, but in general, the first time you do a long-distance project, you're going to spend a lot of time finding contractors and keeping tabs on them. Not just because you don't trust them, but because they don't yet know what you expect of them or what the final product should look like.
I'm heading back to Milwaukee tomorrow to kick off our second project. I'm hoping that I only need to come back once during renovation for this project...
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Just a quick update here -- we sold the first Milwaukee project yesterday for a $27K profit on a $330,000 sale (not including travel costs). Not a home-run, but a profit nonetheless. And it allowed us to build a great infrastructure up here.