Completed And Rented
I finally got the project finished. It took longer than I hoped. My GC did not work most Fridays over the term of the project. I purchased the fourplex for 40k, I got a construction loan for 51k pre appraised at 110.5k. I paid 500 good faith money, paid 435 for appraisal and credit check.
The 500 was applied toward the purchase. If you look at the 435 I paid out and see it as a gimme. One could call this a no money down deal.
The project was completed on Friday and all four units were rented by Sunday.
I should close on the primary financing within the week at 6.0%. Should clear 512 per month pcf.
Lessons learned: 1. Go with the GC to pick out your kitchen cabinets, and other house hold fixtures. 2. Demand that everything that you find that is not to your liking be fixed right then and there. 3. Never pay out most of the money before all the work is done ( you have to have some thing over these guys head in order for them to finish the last 5% of the project).
Over all I feel good about the way things turned out. I have one more rehab that started just as this one was being completed. I will be looking for something else that I can start in the spring of 2004. Winter rehabs just got too many problems.
Vern
Congrats....
How long did the project take?
Thanks
Mike
[addsig]
Thanks Sash,
It took six months. It was a six month construction loan at 4.5% interest only. I had a lot of persons in the area that wanted to rent during the rehab. People would walk through and ask for rental applications half way through the project.
I might have asked for more rental money, but why do so when I am making a good return on my investment.
Congratulations Vern!
Is the rent average in your area, or is it low?
I learned one thing from a friend who owns a lot of rentals:
Before you try to raise your rent to above the average market, fix or replace everything the tenants complain about withing 48 hours.
They will never leave you.
Hello OCSupertones,
Well I would say the rents in this part of town is very low. The smallest unit of the four is renting for $250. The next one is $335 and the larger two are $350 each. Could I have asked for more, yes I could have. I maybe could have gotten $50 more per unit, but I don't need the extra money. I feel good about providing good quality housing for the people in that community. Even at these low rental rates, I am still making a good return on my investment. I paid 40k for the property, I put 53k into the rehab. I got a low interest mortgage. I will make at least $512.00 per month positive cash flow. All I got to do is ride by to make sure all is well every now and then.
I am just happy it all came together in the end. I am still holding down a full time job and investing on the side. If I am able to keep my investment strategy going at this rate, I may be able to retire within the next three and a half years. I set my goal to be met on a five year plan. It has been one and a half years thus far. The program does work, if one works the plan. I do have to give cudo's to Carleton Sheets. I never would have gotten into the business without his start up kit. It was the best investment that I have made to date (thumbs up to CS's NMD pg).[ Edited by Vern on Date 10/08/2003 ]
Congratulations!
Couple of questions:
How did you find your GC?
What was the payment schedule? (e.g. 10% down, then 40% haf way through, then 50% at end)?
Did he buy all materials (looks like it since you said you went with him to pick them out)?
Hello Andrewb,
I did not have a set draw pattern. The first draw was the largest of say 50%. It is always better if one were to hire a larger firm to do the rehab work. However, larger construction companies is not always better at doing what they say they are going to do either. Sometimes it is crap shoot when getting the right person for the job.