First Rehab...
I am looking at my first rehab. I do wish to live there with a buddy while I rehab with him. I hope for a 2-3 month turn around time. It's asking price is 35k. I plan on offering a lowball at 25k hoping to settle around 30k. Comps in the area are 50-60k I'd say. I'm hoping to put 7-8k into it. I plan on tearing down the previous garage and rebuilding another($2.5k for materials). Also putting up a wall in the house, flooring, painting, possibly siding, a lot of landscaping(till up the whole yard maybe). Maybe replace the windows. Other than that the house is pretty good. I would estimate 7-8k since there is nothing very major. A lot of cosmetic stuff. Hoping to be able to sell around 45k-55k in a couple months. My problem is that I cannot get financing anywhere since I have NO credit(one inquiry is the only thing on my report) and just started claiming income tax on my jobs, so it looks like I just got two jobs(no employment history since last October). What do I do???
Thanks,
Chase
Depending on the size of the house and your location I would re-evaluate your repair estimates. If I were going to replace windows, replace siding, new floor covering, landscaping, and construct an new garage there is no way I could do it for 7-8K. Also you must calculate into the equation your holding cost associated with holding the property for several months of reha and holding cost and time while trying to sell. Just my 2 cents worth.
PS. Don't forget that you also have to figure capital gains on the profits of the sale.
Replace windows(maybe) I'd estimate at $100 window doing it myself... $800. Siding I have a buddy that owns a siding company that is teaching me how for free, so I get it all at cost($700 tops), new floorcovering will only be cheap($1.75 sq ft) hardwood floor on about 100 sq ft. Then one room needs the real hardwood refinished. (All of that $300 total), new garage would be about $3,000(and a guy i work with has built one and is williing to help. Four seasons porch which would be about 200 sq ft I'd estimate at another $2000-$3000. Landscaping would be more time, but about $500 for grass seed and plants. All of that equals $7300 - $8300. Cost of holding would be about $600/month(four months tops) so about $2400(divided in half because I have a roomate that will pay half rent and help me work on the house) So that will total $1200, That all equals $8500 - $9500. If I could settle on it for $30k, figure spending $10k, thats $40k invested with hopes of getting around $50k.... I guess I'm having hard times finding where you could make more than that. People must have to REALLY dig for rehabs that make $30k + or are just investing in a 150k+ neighborhood.
Quote:
On 2003-08-22 11:35, kellygreen wrote:
Depending on the size of the house and your location I would re-evaluate your repair estimates. If I were going to replace windows, replace siding, new floor covering, landscaping, and construct an new garage there is no way I could do it for 7-8K. Also you must calculate into the equation your holding cost associated with holding the property for several months of reha and holding cost and time while trying to sell. Just my 2 cents worth.
PS. Don't forget that you also have to figure capital gains on the profits of the sale.
You should go to a hard money lender. They will lend you up to 70% of value after rehab is done.
I had the same problem, no credit at all, I was lucky enough to have a job that required looking at alot of credit reports threw out the day and figured out a fast way to establish a strong score - getting a few credit cards, even if they are the secured ones will boost your credit becon score alot, and then do somthing like get a car loan with your new credit becon financed thew a bank or other party that will let you go on a "stated income" that doesnt require extensive verification, somtimes a few pay stubs and an honest looking face is enough.
That will add some beef to your report and from there you just hold your job for 6 months and you will have some borrowing ability with most banks.
Another idea is find someone to invest, I think the deal sounds intresting myself, but if you bought it at 30k and you and your buddy did the work, it sounds like it would be pretty tight after holding costs and taxes, talk to a tax professional about it. cap gains is a killer if you dont see it coming.
sounds like alot of work for two people in two months, and figure in the time you hold it before you actually close too. even if you found a buyer tommorow, it could still be another mortgage payment out the window before you actually close.
with all the unexpected things that seam to come up, I dont really get too excited about an oppertunity unless it will allow me to walk away with at least 20k in my pocket after everything is said and done. -good luck man, I hope it pans out!!
Yeah I will call a hard money lender on monday. That will hopefully work. I've tried looking for an investor but a lot of people aren't familiar with this kind of thing so don't want to invest. The plans have changed, the garage would stay up but the four seasons porch would turn into an addition instead of a porch. I brought a buddy to look at the house. He has a roofing crew and does rentals, rehabs, etc. He thought it was a great deal even at the 35k asking price. His time is too tight to help because he is having problems finishing the rehab he has. We'll see though, at least I know someone else thinks it is a good deal.
Thanks
Chase
Let me recommend a good book.
buy it, fix it, sell it, profit
by kevin myers.
I got it at the library. Gave me a couple of insights and ideas that I wouldn't have thought of. It's not a long book. I read it in a couple of hours.
Good Luck
Ronnie
Sounds like you have some decent equity in the property. Instead of rehabbing it, maybe sell it as a handymans special. Go ahead and tie it up using a contract. Find a buyer for it and flip it wholesale. After you do this a few times, you can go the hard money route and use some of your own funds on the purchase. Conventional loans for fix and flips are tough. Most lenders want the property habitable before they'll loan you money. Better to tie the place up then to put up the funds to buy it. Being the property is distessed, you shouldnt have any trouble negotiating with the seller for some flexible financing. Maybe he will even carry the whole note just to get out from the property.
I am getting a lot of help and replies tonight... I do have many questions that pop in my head every few minutes. If anyone is free this evening/morning to answer a couple questions, I will be in the chat room on this site. My AOL IM is also Ruman if anyone has that. It's a lot easier to have a conversation with someone rather than a message board. I am extremely determined to start and would do about anything. I'm trying to gain all the information I can, and I've done pretty well so far.
As far as the seller wanting to get out of the house, they aren't in a huge hurry. I offered 28k, 1k down, 7.5% interest, 3 yr balloon. The realtor replied saying that that wouldn't be enough for her to pay off her current contract, but that the REALTOR would buy it and sell it to me on contract with the same terms for 35k. I got very excited, and being the haggler I am said 33k and I will sign today. He wrote me back the next day saying he spoke to his "partner" about it and it wasn't worth the risk to make a couple thousand in three years. The only way they could make it work was $40,000 with $4,000 down, 2 year balloon and 9% interest. That kills my profit margin and I don't have that kind of down payment. Anyone on here willing to purchase it and sell it to me on contract? I'll be in the chat room. Thanks for all of your help
Chase
Unfortunatly the chat room is not currently working, but my AOL name is Ruman if anyone would be able to contact me there!
Thanks,
Chase