Posted by Chris Guerra on December 12, 2006 at 20:27:25:
PS Rehab timeline could be much shorter, but I expect some tenants might have recent 1 year lease that will need to expire, before we can get into those units.
Thanks, Chris
advice needed: to be or not to be - Posted by Chris Guerra
Posted by Chris Guerra on December 12, 2006 at 20:23:10:
(long post, but want to paint the picture).
I would appreciate any lender or private money input concerning a deal I am about to tie up in a revitalizing section of town - Columbia SC.
The property is 3 acres in the city, ear bus routes and shopping, 5 miles from the University of SC. Anyhow 8 duplexes clustered in two little semi circles over the three+ acres(16 units total) all brick construction, 1000+ sq ft each unit, 2br/2ba, screened in porches and fireplace in each. Washer Dryer hookups also within each unit. All seperate utilities, underground. Paved off street parking under the pine and oak trees. Fully rented. Some landscaping could be done to improve curb appeal and certainly some of the larger trees could be dropped to open the place up some more, but not bad overall. Construction is late 80’s early 90’s. Just re-roofed. Purchase is 900K. Owner was asking 975K. I am planning to do condo (actually townhome or villa is more appropriate terminology) conversion and county/city is aware and reviewing proposal.
Guesstimating another $200K needed to do entire project. (40k exterior/outside) to Drop trees, redo landscaping, parking lot, add child playground area on back acreage, fence in entire community back and sides. On structures no exterior work appears to be needed (I inspect properties for a living)with exception of small areas of rescreening porches and painting/restucco chimney chases. On Interiors I will do complete re-vamping of kitchens, baths, new carpet throughout, new appliances,painting. Also will replace AC units and water heater. Anticipate a good $10K rehab costs per unit on a unit by unit basis (not that they need them as they are all rented 600 per month x 16 and bringing good cash flow to current owner) however if I am to do conversion and maximize sales price, I want to do it right.
Therefore total project costs is estimated at 1.1 million (900k purchase 200K rehab) still waiting to hear from sity/county on any impact fees, permitting, rezoning, deeds, etc. Perhaps another 100K I am unsure, but lets say 1.25 million absolute total.
Sales, expect 18 months to rehab all units (sales will begin after first MODEL is complete and ready for showing to home buying public or other investors) as deposits are collected and home “site” selection is known we will begin to work on those units, exterior and site work will begin and end by the time the 1st model is ready to show.
Long sotry short, as leases expire and tenants move out, unless they want to purchase or lease option, work will conclude. Bottom line - Local realtors are stating sales prices 125k - 140 possible. Great what ever they feel we can get. I will expect to net 100k on each finished unit or else won’t take on project (remember this is all still developing) some numbers not yet solidified. But if 100K net is possible on each of the 16 units I believe that equals 1.6 Million (on the small side of the expected numbers)- the 1.25 needed (on the max side of the investment) so what is that …worst case profit…350,000.00…(perhaps better, maybe 500k in profit) don’t know exactly what others think but it seems like a nice return).
My question - what do you think? Is this worth pursuing? Would you do it? Any potential pitfalls down the road? I plan to do alot of the rehab myself, usually do about one a year. Photos of my work available.
Thanks, Chris