Hi,
You need to be careful that you don't make your first fix & flip rehab tougher on you than it needs to be. It should take between 2 and 6 weeks to do most rehabs, with that said you could have a very organized crew who can knock one out in a week or ten days and you may have a rehab that takes longer than 6 weeks where there is intensive structural repairs requiring engineering / architectural design and submission for permits which slows progress!
Being a slave driver does not help, generally speaking experience tells you how long the project should take and you reverse engineer that completion date! Reverse engineering the critical path means you know tile work has to for example be finished by the 26th day but you actually allow your tile contractor the time he needs by asking “Bob how long does your crew need to finish my tile work”? Bob say’s “Redstar we need 5 days to finish our work”! So you know Bob and his tile crew need to start there tile work on the 21st day in order to allow proper time for Bob and his crew to finish there work.
So Bob has to be scheduled so he has the time he needs and you get the work completed on schedule! You notice I included one (1) extra day in Bob’s schedule as a contingency day because of weather delays or something outside of yours or Bob’s control. Make sure materials including tile, thin set, grout, spacers, trim, border, etc. are ordered and delivered on or before the 20th day of your schedule!
You have to make observations of both plumbing, electrical and mechanical (HVAC) as you walk the property! Obviously a home built before 1978 could have asbestos, lead based paint, poly butylene, leaded joints, galvanized drain pipe, clay pipe, galvanized water pipe, ungrounded wire, knob & tube, etc. Your going to need to develop your intuition involving plumbing, electrical and mechanical items. Beware in some jurisdictions certain specific things have to happen involving lead based paint, asbestos and lead pipe joints which must have specific remediation / reclamation handled by a licensed contractor.
You can buy at bank auction if you want, short sales are an option but bear in mind a short sale is usually sold to a owner occupied buyer as their has been litigation involving the 1099 of short sale difference between amount owed and amount sold for and because of this most banks and lenders intend to find a owner occupied buyer who will pay close to the current FMV which is much better for the seller (Defaulting Party) and the difference in sale price versus debt!
That HML is pretty much in line with the market but what kind of interest will they charge and after putting 15% down for the purchase will you still have enough money to carry costs and overhead until you get your first (1st) draw? You are going to have other costs other than securing the property in the first 30 or 40 days.
3.9% is the cost of doing business but you have to calculate your numbers, make sure their is no prepay penalty, and that your interest rate and points factors into your plans. With that kind of points your interest rate should be much lower than 18%!
You will probable put a new appliance package into every home you rehab for resale to a owner occupied buyer! If you were rehabbing to specifically make a property a rental you can in a class C or class D property get by with cleaned up and refurbished appliances. To get the right returns in a property your selling retail as an owner occupied property you will need to provide a brand new appliance package.
We generally pay around $2100 to $2200 for a new appliance package in stainless steel! In the western US we use Pacific Sales which is a big provider of appliance packages to the home building industry.
GR