All Forum Posts by: Miles Stanley

@Stephen Matson, @Suzanne Griffiths

i finally did figure it out.  I was missing the amortization that takes place during the months YOU are paying the mortgage while the rehab is happening.  

You take the Refi Loan - Rehab Costs - Refi Costs - Purchase Costs - Purchase Down Payment - Purchase Loan + Amortization that occurs during rehab period (viewed as a '+' because it increases your equity).

The calculator does not account for holding costs in the 'Total Cash Invested', but i think you will likely make this back during the initial rental period before the refi since the cash flow tends to be highers (bc purchase loan amount is less, lower P&I payments = higher cash flow). So its probably a wash a lot of the time. After the refi, the loan is likely higher (otherwise you messed up on the BRRRR) and the cash flow drops.

Thanks!

Hi all,

I'm getting some prelim rehab estimates for a rental house I'm trying to buy and i had some questions about material grades specific to my area/state.

Flooring - i want durable/tenant-resistant but cost effective.  i was thinking ceramic tile throughout, but my contractor recommended the vinyl wood-looking flooring.  Said it was cheaper than tile and durable to boot.  Don't have experience with it, but I'm worried if the TX sun beats down on it daily through a window that the adhesive might eventually give and the tile planks might pop over time...any thoughts?  I might be paranoid here...

Countertops - I'm thinking formica/laminate in kitchen and bathrooms.  my neighborhood doesn't support granite...again going for durable and cost effective.

Paneling - the living room has paneling and i was thinking about just painting over it and not risking pulling it down and opening the pandora's box that MAY lie beneath.  Anyone had satisfactory results here?

Ceiling fans - thinking about just putting 1 fan in the living room and just lighting in other rooms...are fans expected these days?  again, Texas...i couldn't live without my fans, but that's my pref

Lawn - grass in front and back is sparse/weedy...is it worth it to reseed/overseed or just let it be?

Added exterior room - previous owner built on a small exterior room that isn't duct'ed for AC or anything, but would make a nice little storage room.  Isn't finished out with sheetrock or anything either, just basic plywood...may or may not be insulated.  Should i just leave this room alone or bother sprucing it up?  maybe just flooring??  Pics below...

THANKS!

Good night...

@John Leavelle

Thanks for your valuable input!

i have considered the ARV and have a rough offer price in mind...after the walk-through today and upon receiving the estimate, i will have a solid idea shortly thereafter. i plan to ask the seller after the walk-through if she a price in mind. if she turns it back on me..i will just tell her that i need to review the estimate first and verify the sale comps before i can give her a number...i really want her to give me her number first. i hope to have my offer drafted and sent this week if all goes well today.

I am slightly nervous about it not being under contract yet...crossing my fingers on this one that she didn't consider any other buyers.  Would it be better next time to just get it under contract with some offer price and then negotiate it down later pending the option period inspection results?

Thanks,!

@Thomas S.,

yea i thought about that too.  but tell me, if you get it under contract, wouldn't that mean an offer price was made?  so if the due diligence and inspections made during the option period reveal something that would require an adjustment to the contract price, would that be an issue?  i know everything is negotiable, but i didn't realize you could just alter the contract price that easily.

can you elaborate on this?

So should i just make the owner an offer prior to this meeting and see if the owner will sign it?  How do you break that barrier of making an offer price without knowing what they will ask for the property?  Should i ask her if she has a price in mind?

Thanks!

@John Leavelle

 Just curious, but is there something wrong with using conventional financing on the front end and the backend? Condition wise, the house is livable so I would think they would finance it… Granted it would take longer to get to closing.

Thanks,

Mds

I found a hot lead in my area and the preliminary numbers look great!

i received rent and sale comps from my realtor and have received pre-approval from my lender. The home is solid and livable, just needs updating, hence why I'm pursuing conventional financing. I am pursuing a BRRRR method here if the purchase price is right.

Lastly (the big one)...REHAB!  i have set up a meeting at the property with the owner and a referred contractor from a BP member (i have already requested and received some references and will be following up with them tomorrow most likely).  I have an overall scope of work written up and i plan to walk the property with them to get a prelim idea of the rehab costs (to which i will add a contingency).  i already have been to the house through an estate sale and took a bunch of pics, so this property is not sight-unseen as of now.

Is this approach reasonable?  Once i get the prelim rehab $$, i can wrap up my numbers and get my maximum offer price.  Property is not under contract yet.

Is it weird to meet with the owner and a contractor together?  Don't see what choice i have here. 

I appreciate any input.

Thanks,

minor thing (hopefully), but when registering for LIstsource, it requires that you enter a company name. I don't have one yet (I'm planning on setting up our LLC in the coming weeks)...so how do i get around this? Can i just put 'none' or something?

Thanks,

@Carl Richardson

mmm i dont think you did...i didnt receive anything.

Good Afternoon all!

I'm in need of a solid and reasonable general contractor on my rehabs for the purposes of bidding, inspecting properties and carrying out the job when needed.  We are actively looking at off-market properties and we need to get in touch with a GC ASAP to not cause us to possibly miss out on some deals.

Would anyone local be willing to refer me to a GC or 2 (or 3)?  I have a list from the Blue Book, but it is many pages long and a lot of them probably do not apply (nor is there a quick way to filter the list short of calling every single one and taking a chance).

Thanks so much!

Hello all,

I have seen several posts about confusion between what is considered CapEx, maintenance and repairs. To me, repairs and maintenance can almost be combined (assuming CapEx items exclude repairs and are their own class altogether).

I have heard that CapEx items are defined as 'depreciatable' by the IRS. Does anyone have the link to the page on the IRS website where it basically says what is included in this category. Does such a list exist?

I know there is much debate about how to account for CapEx and the method about breaking down each item into a monthly cost derived from the useful life of the item seems to prevail in a lot of circles. I am trying to put together my own spreadsheet for this and this information would greatly help me out.

Thanks!