I’m doing my financing through statewide lending (www.statewidellc.com) They require you to pay for the interest only during the 6 months with the balance due at the end. They do offer extensions but they have to be approved. Therefore my out of pocket expense will be the interest, utils, insurance and taxes until I sell the property. Also there is a $100 fee every time they send out an inspector that checks that the work is done before they pay the contractor.
Statewide wants their investors to have $6000 in reserves before starting a project but i think it’s stated and not verified. Therefore you probably could use a low interest credit card to handle these expenses if you don’t have the reserves.
I was hoping to get some opinions on my first rehab deal. I’m in the process of getting the financing (hard money) and the contractors but my offer has already been accepted. I’m paying $32,500 for a property (which was flipped to me…seller paid $24,000) with $2000 back at closing. So my total cost for property is $30,500. The comps in the area range from $58,000 - $75,000. The house will take roughly $10,000 in repairs (new central air, roof patching, remodeled kitchen and bath, painting, new carpet and repaired windows) So that makes my cost $40,500. I placed $4050 for listing costs with realtor so I’m at $44,550. My holding costs (12.75% hard money for 6 months plus utils and taxes) I estimated at $5000. That puts me at $49,550. Since I usually take the lowest of the comps I figure I should then net $8450 from this deal before taxes. Any opinions? Am I forgetting anything?
Re: Newbie seeks opinions on first rehab - Posted by vvaughan
Posted by vvaughan on January 08, 2003 at 19:04:20:
Start developing a marketing plan. Although your realtor is going to list it, don’t be scarred to do some ( I stress some, and not alot) of your own marketing. After all, the sooner you sell the more money you put in your pocket. Here is a way that is free, knock on the door or leave fliers on the nearest 20 houses around. Let them know you are rehabbing it, and that it will be selling for $XXX and should be done on X/XX/2003. Offer them maybe $100 or one of my 3day cruise certificates (you can buy them from me for $100) if they send you a seller.
Re: Newbie seeks opinions on first rehab - Posted by Catherine
Posted by Catherine on January 08, 2003 at 14:53:56:
I am also a Newbie and have a question. We’re you able to finance the total cost $49,550 or will you be out of pocket until the house is rehabed and sells? I want to jump in but don;t have cash to float while waiting for a sale.
Good Luck with your project.
Thanks
Catherine
Make sure you get insurance, regular homeowners and title insurance. Your numbers look good, my opinion is get a quote for the air and hold off on having it done, this will give you a slight cushion and you can offer money at closing for the air, may be able to offer less than what it cost. Most people won’t buy or not buy a house over the air. But carpet and paint and kitchen work should be done to get top money. My first rehab took a total of 9 months, mainly time to find a buyer was the holdup.Don’t get down if it doesn’t sell right away, it will happen.
Let your contractors know if everything goes good you will use them again, this sometimes keeps them honest. Good Luck and nice to see you take the plunge.