My latest rehab has been extremely stressful, but we finally made it to market. We got this lead from a fellow investor who could not start the rehab due to an unplanned tragic event. He called me up with the opportunity and advised me that he wanted to sell for $127k. I advised him that I would pay that for the property. We closed on the property in August of 2014.
When we originally bought the house, it was a 3/1 at 1,000 square feet. We knew we had to add 700 square feet to the existing structure. We were looking for a $325k ARV. We started the project in October due to personal issues, plans, permits and life getting in the way. We structured a deal with the hard money lender that allowed us to delay payments until December due to the fact that we were putting 10% down. Remember: Always be creative, even when working with your lenders.
The contractor is very good at what he does, but has to be the slower than an Obese man at a Marathon. As you know (or as you should know), time is money when you are rehabbing. Every day you hold onto a property, you pay interest. The contractor is more like a business partner than a contractor. He funds a lot of stuff and even funds rehabs sometimes. So, in a situation like this, you have to take the good with the bad.
Of course, we were over budget and ran into a few hiccups, like neighbor telling us it’s our fault someone broke into their house because the thief used a brick out of our front yard. In a nutshell, the usual. You can read more about the whole process in this article.
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Back to the transformation. As you can see, the house did not have a driveway, which is a BIG issue for a house asking $300k plus. We had to remove a monstrously large tree to get a half moon driveway for the house. It came out very beautifully. Also, the front of the house had no character so we added a gable in the front, which made the house look appealing and inviting. As far as inside, besides the extension, we made an open kitchen that allows you to interact with guests or family members in the living room.
As far as the existing house, we used the original hardwood floors in place. And in the extension of the house, we put in new hardwoods. The stain on the floors came out beautiful. In the kitchen, we used a grayish cabinet with an awesome granite countertop to match the gray theme through out the house. The two existing bedrooms are kind of small, so the real estate agent suggested we do staging to allow people to envision how they could fit their stuff in it. The master bedroom is a masterpiece, to say the least. You have an exit to the back deck, and the bathroom is to die for. I mean not to brag, but the bathroom is one of those things you see on HGTV. If only I could afford to live in the houses I rehab. Maybe one day I will be fortunate enough to do so.
In the backyard, we had to remove the bamboo. In doing so, we had to remove it from the roots to ensure it would not grow back. There was also an ugly-looking shed we took out. After making a few alterations, the backyard is now a place of peace.
In conclusion, we just listed the house yesterday for a price of $370k. So to recap, we bought for $127k and put $125k into it, looking to sell for $370k. It was definitely a learning experience for me. For example, don’t mentally cash checks until after you closed the deal. I could have sworn I would have had a check in May for this deal. But things happen and usually don’t go as planned, so you’ve got to keep rolling with the punches. One thing real estate or any entrepreneurial venture does is bring you patience. It also makes you feel good that you can transform a neighborhood to make it beautiful. The neighbors literally came out thanking us for the job we did. It made me feel like I did something completely worthwhile.
Investors: What projects have you been up to lately? Have you run into any issues?
Let me know with a comment!