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Rehabbing Real Estate
House #4: New Rehab Real Estate Project
My new rehab real estate project is getting under way. It was tough, tough, tough finding this one. I must have looked about 50 houses, made 20 offers over the last couple of months before I could get my hands on this one. Such is the nature of real estate investing.
I think one of the reasons this rehab real estate opportunity was hard to find was that most of the other houses I was looking at were in pretty good shape, in other words they were not “ugly enough”. Meaning that they did not need that much work plus they were discounted foreclosures so the banks were getting plenty of offers.
This one was in pretty bad shape and I think the hole in the kitchen floor and the smell of cat urine kept most buyers away . But in the end it will make a great opportunity to flip a house.
I had to haggle with the bank quite a bit to get them to come down in price. At the beginning they would not botch a bit, so I went ahead and did an inspection on it AFTER I had it under contract.
This is what I did to get them to come down in price: I took a lot of pictures of the damage and did a mold test. I then went ahead and put all this together in an inspection report that had both pictures, results of mold test and approximate cost of repairs. Since this was done during my due diligence period, I then went ahead and lowered my offer price and provided the report to substantiate my lower offer. Result?
Purchase price lowered to $59,000; lower than my original offer which they refused the first time .
Rehab Real Estate: Flip a House
I’ll give you a quick rundown of the work we are going to be doing. You can also see the desirable “before” pictures to get an appreciation of the different shades of mold we are dealing with .
- Lots of siding repairs. The majority of the siding is in good shape but due to poor drainage and lack of maintenance some siding was damaged and is letting water into the house.
- Kitchen overhaul. No we are not replacing cabinets this time. Surprisingly the cabinets are in good shape and we are keeping them but we will install a new tile backsplash, new appliances, new countertops and replace the hardware on the cabinets.
- All new flooring. New carpet in rooms, new tile floors in baths and if budget allows it then new hardwoods in main level.
- New roof. Yep, this is the first time I am making this call on a rehab real estate project. We’ll see if it pays out.
- Replacing door hardware, new entry door, new patio door, sub floor repair, new garage door opener, regrouting bathtub tile, major yard cleanup and more small stuff.
- New water heater and HVAC.
- Lots of drywall repairs to remove all the mold.
The financials in this deal are going to be tight. That is mostly due to the fact that in this market no one knows what the heck anything is worth anymore so I am working on the assumption that this house will sell in the $125,000 to $135,000 range which is lower than any of the comparable sales I could find in the area. So my rehab budget is around $26,000.
Go take a look at the rehab pictures and then stay tuned to see how this rehab real estate project turns out.
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