I finished my first rehab --- on time and under budget. Whoo hoo!

General Real Estate Investing
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:biggrin

Hey guys,

This stuff is “old” to you experienced rehabbers, and real estate investors, but this was a new experience to me. I thought I might share my results with everyone though.

As I mentioned in a previous post, I purchased a 2/2 home for $0.49 on the dollar. This place needed LOTS of work — it was ugly and trashed. In the last 6-7 years it was occupied for only about 2 months…ugh. However I got a deal on it, and within 3 weeks of closing (though my offer AND $500 escrow were accepted months ago), I’m all done. It should rent for 3% of my total invested basis per month, on the low end, per market comps.

Also note that after reading books such as “Flip”, and taking the time to learn what things cost at my local suppliers, I was able to estimate almost to within $100 of my $3000 budget to remodel this place. I came in UNDER budget. And it was just $3 grand. Cool, eh? LOL.

Here is what happened/took place in my first experience, though note the items below did not happen sequentially as listed:

  • Demo’d out hideous looking carpet, linoleum, tackboard, etc
  • All new paint — every square inch of the place including the ceilings, molding, etc
  • All new faux wood flooring
  • All new miniblinds
  • A new dishwasher, and a used but nice refrigerator, stove and garbage disposal
  • A refurbished A/C compressor (note the previous one was stolen years ago) and a custom welded metal cage to go around it
  • All new interior & exterior doorknobs and deadbolts
  • A few new light fixtures
  • One new sink
  • All new outlet/switch/phone/cable covers
  • Repairs to 5 different pipes that leaked
  • Several repairs to 2 toilets
  • Dyed carpet on the stairs to almost new condition; luckily I could save that carpet and the carpet inside of the closets
  • Repaired/textured/painted giant (in excess of 2 square feet each) a total of four holes in the ceiling and walls; I learned how to do drywall! It’s simple.
  • New weatherstripping around doors
  • Repairs to the electrical box outside
  • Cleaning, cleaning - and did I say cleaning?

I did this in probably 40 hours of my total time, with the help of some contractors and my wife of course.

In the meantime I had the lease drawn up, insurance put in place and transferred the property from my name to my new holding company’s name (an LLC).

I learned alot — and it was a good experience. It was hard work, but I loved every minute of it. I think I was born to be a real estate investor and someday a developer. I can’t wait for the day I can sell my existing business and move into real estate full time. It’ll happen within 5 years.

WHAT IS NEXT?

Well - I stuck a For Rent sign in the window and got 3 calls in 2 days. I am going to start returning the calls on Monday and I’m going to get this place leased out.

Then I’m going to go out and buy up to 5 more of these babies right away — WITH MY OWN CASH!! Now is the best buying opportunity EVER!!!

Have a great day my real estate investor friends!

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Congratulations! It sounds like your first rehab went very well and that it will make an excellent rental!

Mike

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Congradulations by the way. 3000$ for all that, sounds incredible.

I have question.

I don’t understand why the prices in Dallas seems to be so well priced. The cap rates and asking prices for multi-units are so attractive.

Did the economy crap out? Is it getting worse? Is it because of the lending market?

I hear the dallas market is still somewhat strong yet I can’t figure out why prices are too good to be true…

This is coming from someone where the average multi-unit is for sale for 10-11 times the gross revenue, I am seeing properties for sale at 4-5x gross revenue, incredible.

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Tien, I got your PM with the same question. I emailed you a multi-paragraph answer… =) I hope that helps. Email me if you have any additional questions

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Motivatedceo - as I read our post I couldn’t help but feel your excitement. I am right behind you… today I got my first property at auction… And I am planning to go the same route as you went… And reading your post was an encouragement… I will post my results here as well…

One good thing about this property I bought is that it is really close to my work. I am planning to do some of the work myself after work and hire out the big stuff… I am so excited… :O)

Did you keep the old kitchen cabinets, countertops, bathroom vanities, showers and bathtubs? It seems that every house I go to, I feel the urge to change those items… I guess I will need to come to terms with the fact that I am not going to live in the house. I should only do the minimum necessary to make it clean, safe, and put it back in rentable condition. You seem to have mastered this aspect of rehabing properties… Congratulations!

I am rooting for your next 5 properties… But move quick, because if you wait too long I will end up doing five before you… :O)

Have a nice weekend!

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You should rehab the property based on your target market. My target market was a low income tenant, so I went for a “clean but basic” home.

Yes, I kept the old kitchen cabinets, countertops, bathroom vanities, showers and bathtubs. They were all in decent condition, and after a good cleaning looked good. And since this is a buy & hold (vs a flip) property, the more dollars I save the better my ROI will be.

Good luck on your property. Just remember to set a budget, and stick to it as much as possible. But setup an emegency (backup) budget – just in case. Also … expect the best, but be prepared for the worst … aka watch out for leaks, holes, rot, etc. LOL.

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Congrats to you, motivatedceo!
I can’t believe how fast you got that done. I am much, much, slower but I have a lot of other stuff to watch over as my excuse.

I like your emphasis on cleaning. I was stressing over possible window replacement in my duplex purchase. The plastic strips were all corroded and gross. But I just sent one of my cleaning gals, Clara, in to do the windows. Guess what, after the years of filth were removed, the windows look pretty good! Now just nice blinds and curtains. Hundreds of dollars saved. It is my new mantra: CLEAN IT FIRST BEFORE YOU RIP IT OUT.

Here’s another money saving tip…
Often you don’t need to paint the whole room. Just bring a paint piece you’ve chipped off the wall to the paint store and have it matched. Now you have an EXACT match and can touch up all dirty spots, dinged walls, etc. This takes MUCH less time and money than a whole new paint job. It will look perfect and smell fresh! If you don’t like it, just keep painting. You will save hours and dollars with this tip.

Furnishedowner

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Thanks.

By the way — I screened 5 potential low income tenants and had the place rented in about 36 hours! Wow!!! This is a HOT area to rent in! And the tenant checked out just fine (per NTN and another service I used). I checked their state & nationwide criminal record, lawsuit records, credit record, employment info and references; all is well enough. They move in on Friday, and gave me a $35 app fee and half of the security deposit — and it’s non refundable of course so I doubt they’ll back out — if so I get some free money. THANKS PROPERTYMANAGER; YOUR BOOK HELPED ME A TON WITH THAT STUFF.

Damn I love this business.

Guys — I have more AWESOME property to (yet) buy than I have money. And I can buy dozens of properties for cash without even blinking. This is the best buying opportunity in my lifetime I imagine. And not a single deal that I’ve seen is on the MLS - minus my first purchase - and that was only because it was a HUD foreclosure. Once you start talking to people and other investors deals just jump at you like you never imagined.

“Your network equals your net worth” ---- no doubt.

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motivatedceo… Congrats on renting the property so fast. Did you rent for full asking price? That would be the cherry on top of the ice cream… :O)

Good luck!

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$25 under the most expensive guy on the block, so awfully close