I just had my first offer accepted. Im a little nervous that my second offer made was accepted, maybe I didn’t offer low enough. but there’s no use in second guessing yourself I guess.
Property was listed in july at 119,000. It has dropped twice and now is l;isted at 100,000. The original offer was for 90,000, I accepted a counter offer of 94,000 with 3% consesions.
The property was recently inherited and was previously a rental property for the last 8 years. It was built in 1923 and is located in a very trendy area in a hot market.
Comps are in at 136,000 to 165,000. We estimated 20,000 in repairs (new windows, siding, kitchen, bath, furnace, water heater, deck, etc…)
Financing lined up at this time is a stated loan for 100% witrh 2 pts @ 9%.
We are doing 95% of the work ourselves and estimate about 45 days to complete.
I know this isn’t going to be a cash cow, we’re just looking to get an education with a lil money to roll into the next deal out of this.
I think as an educational experience, you’ll be fine. Are you going to re-sell or hold and rent?
Keep fastidious records of expenses! If you’re going to resell, all capital expenses can be used to raise the cost-basis. Garner every nickel that you spend or you will be taxed on it!
45 days may be a little ambitious for the work, especially if you’re doing it yourselves. Do quality work using good (not best) materials. Don’t cut corners!
You don’t note any holding costs (PITI, utilities, etc.), but they will come off of your bottomline as well…
Make sure that you invest wisely in the bathroom and especially the kitchen. Women actually buy house (and the seller pays the realtor) and the KITCHEN is what sells women! If you’re going to “over-rehab” do it in the kitchen primarily and the bath(s) secondarily.
Did you figure in for paint, carpet, etc.? If not, make sure that you protect them thru the project or you’ll have that expense too!
Just a few thoughts from my little piece of heaven!
We are definately looking to sell. My father and I are partnering on this project and between the two of us the only thing that we have not been paid to do profesionally at one point in our lives is to replace a furnace, and that is what we are contracting out.
The 20,000 includes just about everything I could think of with an allowance for misc items. All wood floors will be refinished. Tile floor in the bathroom, pergo in the kitchen. I designed kitchens and baths for a few years and will definately be putting in the plywood sides with solid drawers with either maple or hickory doors and face frames along with a solid surface top and stainless steel appliances. Like you said, all middle of the line, nothing cheep but not too expensive either.
All the plaster walls have cove ceilings and picture rail and are in great condition considering the age of the house. My wife will assisting with staging the house, color selection and landscaping to make sure its well “womanized”.
I think this is more then I would normally put into a rehab, but I think its justified because of the area and market we’re looking to attract.
I figure with holding costs and realtors commision we look to net about 10,000 if it sells on the low end of the comps.
Does anyone have a list or a link that gives a very general guidline for estimated returns on improvements? i.e. updateing windows will net an average of 30% for the investment.
Thought it would be a useful tool for a noob like myself.
congrats on your first deal!!! a good place to look for those stats you want is consumer reports, or any realtor magazine. the realtor magazines have a list broken down by major city. hope that helps a little. By the way, did you use a realtor or did you submit your own contract? I am trying to find a completed contract so I can understand what the heck I am doing…