All Forum Posts by: Jimmy Hong

Thanks David Beard, I will have to look into that. I will be getting an inspector and an appraiser out there shortly. I made sure my offer had a contingency regarding appraisal of the property. Current owners are investors as well (2 partners), and they've been renting it out since 2010.

Baltazar Camacho, thanks!

I did some research and I understand that neighborhoods in Memphis can vary greatly. I need to thank Dean Letfus and James Martin, they helped me evaluate the area and my Realtor scouted the street and double checked the property. We also verified rental income and rental income in the surrounding area.

I forgot to mention, the second building is not registered with the city so the second building sq ft does not count officially.

Hello everyone,

Its been a pretty busy week, I'm closing on my first rehab here in Orange County and I'm purchasing an out of state property, contract signed this morning. This one will be a buy and hold in Memphis, TN.

Numbers look like this:

Purchase price $122k
Conventional 20% down and financing 80%

MAIN HOME: 4 Bedrooms, 3 Full Baths, Living Rm, Dining Rm, Hardwood Floors (Currently rented for $ 1,300 per month - Current tenant for nearly 2 years)
Updated Electrical Wiring
New Heat and Air Conditioning
New Exterior Paint
New Interior Paint
Refinished Hardwood Floors
Remodeled Master Bathroom (12" Tile)
New flooring in kitchen and dining
New Light Fixtures throughout
New Doorknobs throughout
New Blinds throughout
Large Updated Kitchen

APARTMENT 1: 2 Bedrooms, 1 Bath, Full Eat-in Kitchen, Large Living Room
(Currently Rented at discount for $ 725 per month to same tenant in 1 Bed Apt (Typically rents $ 785/ mo). Same Tenant for over a year.
Each bedroom features its own sink and vanity area. This apartment features New Central Heat and Air Conditioning, paint, carpet and tile in the bath and kitchen.

APARTMENT 2: 1 Bedroom, 1 Bath Efficiency w/spacious living area & large closet This apartment features New Central Heat and Air Conditioning, paint, carpet and tile in the bath, kitchen and entry.
(Currently Rented at discount for $ 505 per month to same tenant in 2 Bed Apt (Typically rents $ 545/ mo)

GARAGE STORAGE: 1 and a half Car Garage can be rented for storage for $ 50 per month. Currently rented to Apartment tenants.

Gross Schedule Income $2,580
Less Vacany Allowance (3%) $77
Gross Operating Income $2,503
Less Operating Expenses
Insurance $65
Taxes $150
Utilities $550
Repairs $100?
Total Operating Expenses $865
Net Operating Income $1,638

P&I of $97,000 at 5% interest (investment rate) will be around
$550.

What do you guys think? Thanks in advance.

Thanks Jake Kucheck, exciting to be here... now only if this club had a golf course...

Thanks Karen Margrave, I am so excited, I feel like a little kid in a candy store. It definitely wasn't easy, I did a lot of research and reading. Wanted to learn from others and avoid common mistakes.

Thanks Josh Farrer, just wanted to do my part.

Hello guys and gals, just wanted to update the latest on my first rehab. After being on market for 22 days, I got 2 offers over the weekend and one of them is accepting my full asking price. I did a counter offer to buyer to cover the appraisal difference if it comes lower and she agreed and accepted. Very exciting to get this first rehab completed and sold. I purchased it on March 1st. I was very aggressive regarding the listing price, but I wanted to take advantage of this current market.

Here are the numbers:
bought at $297k (cash purchase so no financing)
rehab cost $27,500
Holding costs $1060 for 4 months (March - June)
(hoa $235 x 4, util $30 x 4) = $1060
closing costs around $3000

Sold at $423,500
Closing Costs:
Title: ATLTA Owner's Policy: $1,075
Sub Escrow: $250
Reconveyance Fee: $75
Escrow Fees: $1,047
Deed Prep. & Notary Fee: $100
Demand Fee: $0
Prorated Property Tax: $1,613
Doc Transfer Tax: $466
City Transfer Tax: $0
Commission: $20,116
Pest Inspection: $50
Termite Work: $0
Home Buyers Warranty: $400
Natural Hazard Disclosure: $125
Homeowner Assoc. Transfer Fee: $450
Cushion: $200
Total Estimated Closing Cost: $25,967

Net cash to seller $397,533

I just wanted to thank biggerpockets and members. The podcasts, blogs, forums, and books were instrumental to this rehab.

Looks great, keep up the good job. Looks like you're at the finish line.

Hi Chris Clothier, thanks for your feedback. This deal happened pretty quick and I'm not buying it from a standard MLS listing so I'm in the process of shopping for lenders right now. I closed on a $300k rehab property in California 3 months ago so I do understand the closing costs associated with purchase. It cost about $4500 on that property (about 1.5%). So from what you are stating, because the workload and the parties involved in these transactions are the same, it doesn't matter if the property is $100k or $300k, I'm still looking at $4k - $5k for closing costs? If this is true, then I'm really bummed out and doesn't seem fair.

I'm doing a conventional loan with 20% down and financing rest (about $97k at an anticipated 5% interest rate). Again, I'm shopping for lenders right now, but since this is not my primary residence, I've been getting quotes at about 5% interest rate.

Thanks again Dean Letfus for your advice. I am not factoring financing costs into this closing costs. I appreciate you referring me to your attorney and I'll give him a call on Monday.