All Forum Posts by: Mark Parzych

It's been awhile since my last update. This is an update for the end of week 3. All HVAC, electrical, plumbing rough ins are complete and inspections have passed. We are on to insulation right now. Then it get's into drywall, tape and float, then texture. All that should be done by next Monday.

The outside is still being painted. We actually had a mix-up with getting the wrong paint color. It was too gray. I had them add more blues in it and it came out pretty nice. The downside is that it might be hard to replicate in the future. 

My GC called today saying the gas line from the meter to house needs to be replaced, costing $2200.  The price seems reasonable from my limited experience but it's an unforeseen expense. I asked to verify this with his plumber myself. 

Easy decision... sell.

Would you buy a 215k property that rents for 1600 a month with deferred maintenance?

The plumbing for water is just about complete but they need to do gas. The electric is about 60% complete. HVAC will start tomorrow and take two days. They've started painting the exterior earlier today.

I've scoped out most of my fixtures and appliances. I'm waiting on some more Black Friday sales before pulling the trigger.

Update:

So it's a full two weeks into the renovation. Tree trimming is complete. Foundation is complete and looks nice. It might have been hard to see in earlier pictures but what we did had to be done for an even floor. Plumbing rough in is almost complete. Preparation for exterior painting is almost complete. We had to replace some Hardy and caulk windows/edges/doors.  I'm choosing a gray paint color for exterior with white trim. It'll give it the pop I want and keep it looking more modern. The electrical rough in started today and is ongoing. 

I spent a couple hours with the electrician today discussing location of each lighting fixture and light switch plan. To some it's minor detail, but I feel like these types of details are very important to make sure it has functionality. I see a lot of contractors/flips who don't take the time to plan out details. An example is that on my disaster flip they put in a new wall and door but put the light switch on the opposite side of the door opening. This electrician also brought up adding coax cable outlets so that when the tenants ask for cable/satellite installation they aren't ripping up walls. I didn't even think of that but it's well worth the extra money on the front end. 

Here are some pictures of new foundation and plumbing.

My contractor says all rough in for HVAC, plumbing, electric will be done, with inspections passed, by end of next week. Begin insulation and drywall by Monday the 14th. 

@Jaime Ruiz

 Of course it's possible. I bought/live in a townhouse and rent out two rooms in an area that has the potential to drastically change within 7-10 years. There's bunch of cheaper homes not too far away that will see large price increases when groundbreaking is announced. There are several areas in Houston I like for long term growth and appreciation. I've been analyzing the market for a few years and can see trends in the early stages. I also drive around these areas to see how things are changing. I care more about potential appreciation over cash flow but I'd never buy a property that risks negative cash flow. 

Go through another bank for the refinance. Keep on calling and asking until you find a lender willing to do it. I refinanced my personal residence 13 months after my original loan and dropped PMI. As long as you meet LTV it can be done.

@Lorin K.

For this remodeled 3 bedroom 1 bath 1270 Sq Ft Home.

I'm expecting $1350 and I believe it can sell for $135,000+ so it's right at 1% for essentially a turn key property. Because literally everything will be brand new, maintenance costs will be very low for the first 7-8 years.

In Houston 1% is doable in many areas. 2% Can be done only in certain areas but even then it's rare to find. 

@Lorin K.

The investor was new to investing and found the property through marketing for around 15k; which is basically lot value. He decided to purchase and started the renovation. He put about 15k into it before he was halted due to work and family. He held onto it for 7 months or so until he realized it wasn't going anywhere and wanted his money out. I can understand this same mentality since I went through something similar.

He found and had a great deal, but undervalued the ARV when attempting to sell. I'm not sure why. I saw the ad, did a very quick ARV check my phone at work, went to another house where I had a contractor giving me a bid, told him about this house, and we came there. He gave me a rough estimate, I called up the seller at the property, and we agreed to a price within a few minutes. I liked it because it was clean with a nice exterior and no unknowns in the interior. The sellers ARV still made sense and I didn't see any red flag comps during my quick check earlier. It wasn't until a few days later when I had more time to do thorough research on comps until I realized the seller miscalculated ARV.

Houston has many properties built in the 40s and 50s that need complete remodels. Prices range depending on area but almost nothing close to the city is cosmetic. You can find many many fixer uppers in poorer neighborhoods but I'm sure that's any city. My target is finding property in areas with signs of gentrification and making those long term rentals. This particular one doesn't fit that model but I'll do any deal that makes sense. It's on my route to and from work so it's easy to manage. 

The tree has been taken down. It looks much better overall. I just need to cover up the stump with mulch and flowers to hide it. I can recommend a good tree trimmer in southeast Houston if anyone needs one.

So after doing some thinking and analyzing the numbers, I am leaning towards making this a rental. I talked with a bank today and they had no issue allowing me to pull my money out by refinancing. In fact I'll net 10k profit and cash flow $500 a month according to my numbers. BRRRR method all the way! Something that I didn't think of before, is that they will have me deed the property from my LLC into my personal name, then get me on a conventional loan. I assumed it would need to stay in my business name to refinance, but this is perfect. I want to utilize my 10 Fannie Mae / Freddie Mac loans ASAP while interests rates are low. If this plan's execution is as easy as it sounds, I'll have found the perfect combination of lenders to do BRRRR until I reach my limit. At that point it should be easier to find lenders for BRRRR properties that stay in my LLC. Listening to the past few podcasts helped me have a change of mindset to explore this option further. I have to remind myself that my goal is financial freedom and think more long term.

Permits will be pulled Monday and the electric, plumbing, and HVAC should start Tuesday. Later than I wanted so hopefully no more delays. I think I'm going to put a "coming soon - for rent" sign in the yard next week to line up tenants to move in when the house is complete. It's very early in the process but it won't hurt.

@Julie Marquez

30,000 for plumbing seems like a lot, especially on a 2/1. Are they using copper instead of PVC/cPVC. Even PEX should be much cheaper.