Posted by MikeD on March 11, 2002 at 07:53:42:
Have you tried Lowes?
Posted by MikeD on March 11, 2002 at 07:53:42:
Have you tried Lowes?
Attn: All Rehabers…Please read! - Posted by Adam (NY)
Posted by Adam (NY) on March 11, 2002 at 02:03:53:
I will be doing my first rehab in the next couple months and am looking for a little wisdom. I would like all experienced rehabers to submit a post about a rehab that went either good or bad. Details about the experience would be helpful to me and all other rehabers. What did you learn from the experience? What would you like other people to know? Anything that comes to mind.
Re: Attn: All Rehabers…Please read! - Posted by Kim (FL)
Posted by Kim (FL) on March 11, 2002 at 11:07:25:
We did our first rehab recently and made so many mistakes that we just can’t believe we walked away with money. Here’s what we did wrong:
Trusted one handyman to give us an estimate. He was too vague and we didn’t get details in writing. He said “I can do everything for 7k” (emphasis on everything). When we CLOSED and called him to start we said “okay - get started” then he started saying “when will you get the carpet in, when will the house be emptied” etc etc. So – we had a ton of stuff that was not included in that 7k. Obviously we should have hammered that our before we closed. That mistake, on paper, sounds just ridiculous BUT it’s very easy to get “caught up in the moment”. The guy was nice and we were excited and we just trusted him too much.
Don’t buy in a “war zone” just because the numbers are right. We bought in a crappy area of town and had a contingency factor (2k)for “issues”. However, we did not know that a)someone would STEAL the air handler ($1300 to replace) b)someone would MOVE IN to the garage (no money but a lot of time spent on him) c)someone would steal the electric meter d)an EIGHT and TEN year old would vandelize the place and cause about $1200 worth of damage and take a full weekend to fix. SO - if you buy in a “crappy neighborhood” be prepared for issues.
c)We bought in a yucky neighborhood and our realtor told us the house would sell for $102,000. (we’re in Orlando) Our first thought was “the people that can move here can NOT afford a 100k house”. He said that we were wrong. Our second thought was that I would never pay 100k to live here and his selling price is not realistic. He showed us comps in that zip code supporting that price. When it came time to sell it didn’t move for a while. Some were interested but no one qualified. I spoke to a friend who is a realtor in that area also and she pointed out that houses DO sell in the 100k range there but our street was one of the worst streets in the neighborhood. That was such a good point and we should have taken our gut instinct and done our numbers at 94k vs. 100k.
In the end, (don’t laugh) we spent 14k NOT 7k. Some of that was due to our lack of proper estimates and some was due to the vandelism and theft. We DID sell the house for 102k but had to give him money for his closing costs which means we really sold for about 97k. It sat on the market for 6 1/2 months (9/11 happened during this time frame and that stalled the market for a month or so) and we paid the mortgage every month, naturally, and had that worked into our numbers. BUT - paying $900 a month to a mortgage for 6 months left us with no disposable income.
All in all we LOVED it – we knew, even during the process, that we were learning SO much. We walked away with $1800 in profit which was less than we hoped for but still a HUGE success! We’re doing our second rehab now – it’s under contract to purchase this week and our estimates are done CORRECTLY and detailed and we’re ready to begin!.
All of our mistakes were things we knew about. We’re smart but still made stupid mistakes. So - be careful!!! The one thing that I can just about guarantee is that we’ll make GOOD money on this new deal and all deals hereafter. The learning curve is huge and as long as you realize your stupid mistakes you’ll succeed!! Our three biggest changes:
a) We think we can sell this house for $140,000 but we’re basing our numbers on 136,000
b) We had a meeting with our handman, got everything in writing and THEN said "okay – what does that not include??"
c) We have a 3k contingency this time and we’re hoping that we’re not going to need it!
Re: Attn: All Rehabers…Please read! - Posted by Mike Daly
Posted by Mike Daly on March 11, 2002 at 08:00:20:
Just did my first rehab last year, and can offer these suggestions:
Make sure you have an accurate ARV (after repaired value) on the property. If you get this wrong, you can do everything else right and still lose money. A good contingency to use in your offers is “subject to adequate appraisal.” This protects you if the property isn’t worth what you thought. Verify with a few different realtors to get a true estimate of the ARV before you commit.
Make sure you get an accurate estimate of the repairs! It’s fine to use a rough estimate when you’re making offers, but once your offer’s accepted you need to verify. Get at least 2 quotes from contractors. Make sure you have an escape clause in your contract in case the repairs are significantly higher than you thought.
Thoroughly inspect the property before buying. To do this right, you’ll need to have utilities turned on before you buy it, because some problems won’t show up when they’re turned off. On my first house, it turned out it had a septic tank problem that cost me $3000 that I didn’t find out about until the rehab was almost complete.
Add appliances. On my house, I didn’t do this because the repairs had gone so much over budget I didn’t want to put more money in the house. I finally ended up putting them in anyway to satisfy my buyer, and I’m sure I would have sold it sooner if I had put them in from the onset. You can put in a decent used range, dishwasher and refridgerator for around $1000.
Re: Attn: All Rehabers…Please read! - Posted by Ron (MD)
Posted by Ron (MD) on March 11, 2002 at 05:48:21:
I’ve had three houses that I held for about a year…obviously way too long.
They all had one thing in common – contractor problems. In each case, the first contractor ran into problems un-related to my job (e.g., “legal” problems, financial problems, etc.). (By the way, these were three different contractors…each who had done at least a handful of jobs for me previously.) In each case, I was a “good” guy and tried to be patient, letting him get his situation resolved while my house just sat there, unfinished. In each case, he never came back to the job.
I’ve learned to quickly pull the plug when a contractor stops work on a job. It’s been an exercise in futility to try to help these guys through, and (ironically), the always find some way to blame you for their problems.
Now, my contractors see me as an organized, professional customer, who can be a real a**hole if they aren’t living up to their end of the deal.
Re: Attn: All Rehabers…Please read! - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on March 12, 2002 at 16:30:20:
Thanks for sharing your story with us. Not a great profit, but at least some profit!
I’d recommending putting in even bigger reserves and contingencies. Something like 15% of the deal.
Good Investing*******Ron Starr**************
ouch - Posted by Redline
Posted by Redline on March 12, 2002 at 12:35:52:
$1800 in profit for all that work? Well as you said, the education was well worth it I’m sure!
Re: Attn: All Rehabers…Please read! - Posted by Walt
Posted by Walt on March 11, 2002 at 10:09:32:
Thanks for all the suggestions!
I’ve finally decided I want to get into rehabbing vs. Landlording. I built my own house and rehabbed with a partner a 8800 Sf commercial building, so I have some experience. I also bought the “Buy it, Fix it, Profit” book this weekend and it has been very informative as well. There are MANY “handyman specials” in my area priced from $12,000 - $20,000. Comps are $50,000+.
I plan on starting with just 1 house, and start from beginning to end before looking for another (you know, learn from experience). Of course, I will be keeping my day job.
Thanks again for all the info and keep it up!
Speaking of Rehabs . . . - Posted by Wayne (MD)
Posted by Wayne (MD) on March 11, 2002 at 07:32:03:
Do you know where I can find unfinished kitchen cabinetry that is of a relatively decent quality and at a reasonable price? I need cabinets with simple, solid birch or oak doors that I can paint and I can’t seem to find them anywhere. Veneered composites are OK, but I need solid wood for the doors. I’ve tried a few web searches, but without luck. Would prefer to find them in Maryland, Virginia or environs but mail order will work too if I am convinced of the quality.
Thanks for any help . . .
Re: Attn: All Rehabers…Please read! - Posted by tang-0-rang
Posted by tang-0-rang on March 11, 2002 at 11:37:30:
Walt, where are you located? you said you can find alot of handyman specials for 12-20,000? sounds cheap man.
thanks for your time
Todd Williamson (CO)
Re: Speaking of Rehabs . . . - Posted by Mark (WV)
Posted by Mark (WV) on March 11, 2002 at 08:21:54:
Try Lowes, I was there yesterday and bought a 60" base , birch, $88.00, wall cab. 18" was $44.00 and 36" over sink was $48.00