All Forum Posts by: Laura Levine

Hi again @Account Closed, thanks for following my posts!  

What I would do differently: Make sure to explore the crawl space!  Depending on the type of property we are looking at, I think we would also look into getting a 1 year home warranty from the owner.  I believe the owners knew about many of these issues, but chose not to disclose them as it was an estate sale and was being sold "as-is".  I think now, knowing the market, we still would have bought this house, but we maybe would have pushed to close sooner (start to finish the process was almost 5 months) or put penalties into the contract for delays.  We have also learned about the construction process and what exactly to put in our proposals and when to use an architect

Yes - a total of $100k reno.  We have a couple of people interested in the apartment now and plan to rent it for 4/1 for $1475.  We did live in the property during the whole reno, at times we were limited to one room and there were several times when we didn't have electricity or plumbing and have to improvise or stay with friends.  Luckily we don't have kids at this point, I'm not sure we could have lived in the house with kids.  However, living in the house allowed us to make a $500/m profit on our condo, which definitely helped!  Once we refinance this summer, we expect our mortgage/property tax/insurance to drop from $2485 to at least $2285, which means we'll be living in a beautiful home for $810!  Add in the $500/m from the condo, we're looking at $310/m.  This will allow us to pay off our bills and start saving for the next project!

Hi Wally,

Thanks for your detailed feedback!  It's been a bit of time since I made the original post so we have some updates.  We consulted with our lawyer who seems to feel that the liklihood of being successful with the inspectors insurance was slim.  We have settled with the company for $1000, approximately double what we paid for the inspection.  

We were on site for the inspection, but we were first time home buyers and were learning as we were going.  We knew that the crawl space wasn't accessible from inside the house, but we didn't realize (and the inspectors missed) that there was an outside entrance that they easily could have used.  At this point, we're just calling in a learning experience and moving on....happy that we got more than the bare minimum!

Thanks guys!  @Alex W. - We are based in Hawthorne.  I was using the "class" system based on quality of tenets/safety of area/stability of area vs. more of a classification of the income/town itself...but I guess I could have said more of a A- minus compared to towns like summit :)

Good morning! I recently completed my first major REI (buy and hold) rehab and thought I would share my experience; mishaps, disasters and all, with everyone.

My husband and I bought a 90 year old estate sale house in a middle-class suburb in NJ (an A neighborhood). It's a two-family (2/1 and 2/1.5) that we bought for $315 with a 5% down FHA 5/1 ARM at 3.75% in August. The appraisal for the house came in at $335 when we bought it, and we conducted what we thought, was an extensive inspection (including a separate termite inspection). We obtained a few construction bids beforehand and were estimating a max construction budget of $60k. We had about $20k in cash, a $25k personal bank loan at 6.25% and planned to put anything additional on 0% interest for 12 months credit cards that we would pay back with the rental income after construction was completed. We had a construction timeline of 6-8 weeks.

The project scope included:

Upstairs, a gut remodel of the kitchen, including adding a dishwasher, and opening up a wall to make an open living room/kitchen, updating the bathroom, adding a washer/dryer hook-up, and new paint/carpet.

Downstairs: gutting and opening up the kitchen, adding a dishwasher, gutting and enlarging the main bathroom and gutting the 1/2 bath, enlarging the master bedroom closet, adding laminate floors and new paint. We planned to live in the upstairs unit while we remodeled and then move downstairs to reside in the larger unit for 3-5 years while we rent the upstairs unit.

Once we started construction, we ran into several major problems including a steam pipe running through a kitchen wall that we were planning to open up, a huge leak inside a couple of walls that required the replacing of a whole exterior wall, damaged subfloors, major termite damage that resulted in a replacement of the sill plate in the master bedroom, needing to upgrade full electrical service (and split it into two separate panels) and a corroded water line that required emergency replacement all the way to the street in the middle of winter during record setting cold temps and a snow storm. We also had issues with our general contractor who's subs weren't fully licensed and were careless, which resulted in several delays and several failed inspections. Construction started in early September with an estimated completion of mid to late November. Finished construction (mostly) in mid-February, 2.5 months late, and more than $40k over budget.

Here are some before pictures:

And here are some "afters":

The main problem with the delays is that it has been really hard to get a tenant for the upstairs apartment this time of year, hopefully that will be resolved in the next few weeks though. We hope to be able to get about $1500/m for the rental and we anticipate that when we move out in a few years, we will be able to get at least $2200/m for the downstairs unit. We also had our realtor run a CMA and she estimates that our house is currently worth approximately $415k, and will likely increase at least $10k in the next 6 months. This information was music to our ears because it means that despite all the stress and financial overages, we are not underwater on our house...and to me that is success!

Here are our current monthly numbers:

Current Mortgage with PMI, taxes, and insurance: $2485

Upstairs rental: $1500, so we are paying $985 "rent"

Conservative projected numbers within 5 years:

Mortgage (after refinancing out of ARM and PMI: approximately $2200

Upstairs: $1600-1650

Downstairs: $2300-$2400

Monthly profit: $1700-1750

Despite all the challenges, stress, and struggles I feel like this project was well worth it, we learned SO much, and for the most part, really enjoyed the experience. The next year or so will be spent paying off our bills and rebuilding some cash, but then I can't wait to start looking for our next project! I would love any feedback you may have, and to hear about your own struggles getting started with REI. Thanks for reading!

Good morning! I recently completed my first major REI (buy and hold) rehab and thought I would share my experience; mishaps, disasters and all, with everyone.

My husband and I bought a 90 year old estate sale house in a middle-class suburb in NJ (an A neighborhood). It's a two-family (2/1 and 2/1.5) that we bought for $315 with a 5% down FHA 5/1 ARM at 3.75% in August. The appraisal for the house came in at $335 when we bought it, and we conducted what we thought, was an extensive inspection (including a separate termite inspection). We obtained a few construction bids beforehand and were estimating a max construction budget of $60k. We had about $20k in cash, a $25k personal bank loan at 6.25% and planned to put anything additional on 0% interest for 12 months credit cards that we would pay back with the rental income after construction was completed. We had a construction timeline of 6-8 weeks.

The project scope included:

Upstairs, a gut remodel of the kitchen, including adding a dishwasher, and opening up a wall to make an open living room/kitchen, updating the bathroom, adding a washer/dryer hook-up, and new paint/carpet.

Downstairs: gutting and opening up the kitchen, adding a dishwasher, gutting and enlarging the main bathroom and gutting the 1/2 bath, enlarging the master bedroom closet, adding laminate floors and new paint. We planned to live in the upstairs unit while we remodeled and then move downstairs to reside in the larger unit for 3-5 years while we rent the upstairs unit.

Once we started construction, we ran into several major problems including a steam pipe running through a kitchen wall that we were planning to open up, a huge leak inside a couple of walls that required the replacing of a whole exterior wall, damaged subfloors, major termite damage that resulted in a replacement of the sill plate in the master bedroom, needing to upgrade full electrical service (and split it into two separate panels) and a corroded water line that required emergency replacement all the way to the street in the middle of winter during record setting cold temps and a snow storm.  We also had issues with our general contractor who's subs weren't fully licensed and were careless, which resulted in several delays and several failed inspections. Construction started in early September with an estimated completion of mid to late November. Finished construction (mostly) in mid-February, 2.5 months late, and more than $40k over budget.  

Here are some before pictures:

And here are some "afters":

The main problem with the delays is that it has been really hard to get a tenant for the upstairs apartment this time of year, hopefully that will be resolved in the next few weeks though. We hope to be able to get about $1500/m for the rental and we anticipate that when we move out in a few years, we will be able to get at least $2200/m for the downstairs unit. We also had our realtor run a CMA and she estimates that our house is currently worth approximately $415k, and will likely increase at least $10k in the next 6 months. This information was music to our ears because it means that despite all the stress and financial overages, we are not underwater on our house...and to me that is success!

Here are our current monthly numbers:

Current Mortgage with PMI, taxes, and insurance: $2485

Upstairs rental: $1500, so we are paying $985 "rent"

Conservative projected numbers within 5 years:

Mortgage (after refinancing out of ARM and PMI: approximately $2200

Upstairs: $1600-1650

Downstairs: $2300-$2400

Monthly profit: $1700-1750

Despite all the challenges, stress, and struggles I feel like this project was well worth it, we learned SO much, and for the most part, really enjoyed the experience. The next year or so will be spent paying off our bills and rebuilding some cash, but then I can't wait to start looking for our next project! I would love any feedback you may have, and to hear about your own struggles getting started with REI. Thanks for reading!

Hi everyone,  thanks for the feedback. The termite damage was on the sill plate and joists that would have been very easily observed (there was a huge hole in the subfloor under the hardwoods) if either the inspector or termite inspector had gone into the crawl space that was acceptable from two locations.  The plumbing line was damage to the main water supply line and it was covered by a clamp,  but no one checked why the clamp was there in the first place (unfinished basement).  I did see the disclaimer,  but I saw somewhere that you might be able to ask for damages based on "breach of contract".  Supposedly this is a very well known, reputable company,  so I'm hoping their reputation is worth something and they will be willing to settle.  We aren't looking to make money, just recoup some of our losses. 

Hi All,

My husband and I recently bought a 90 year old 2 family home in Northern NJ.  We had what we thought was an extensive home inspection completed, including a termite inspection.  We planned on doing renovations, but were told that the house was structurally sound and there were no major issues with plumbing, electric, termites, or structure.  When we started the renovation we found major issue after major issue and our 50k renov budget has now doubled.  We believe some of the issues should have been caught by the inspector (structural damage to the sill plate by termites and a damaged main water supply line) and would like to find out what our options are for compensation from the inspection company.  Does anyone have any experience with this, or can recommend a good lawyer for us to work with? Thank you!

Hi All,

I'm looking for a recommendation for an accountant in the Northern NJ area who has tax experience with REI. My husband and I are currently renting a condo while we are working to renovate a 2-family that we are using as a primary residence and need someone with experience to help us get as much money back as possible. I'd appreciate any referrals, thank you!!

@Joshua Springer, thanks...I am aware of that, but typically the fee is less than I would've paid in interest if I use a regular card.  Just FYI the Slate card is currently has a 0% balance transfer offer for qualified borrowers. 

@Rolanda Eldridge  - Thanks!  We should be able to comfortably cover the debt, and hopefully in a year or two will have paid at least the credit cards off (fingers crossed, good tax return! :P)

Sorry, Joshua Springer - you are right.  I meant to say "balance transfer".  

Jon Klaus - I have "before" and "in-progress pictures"  I'll try to post them soon!