FIRST, SECOND, THIRD - FOURTH(?) DEALS?! (Long) - Posted by Carmen
Posted by Carmen on April 19, 1999 at 20:00:07:
Well, five weeks ago, we began our real estate career. Had some bumps (previous post) and disappointments, but it’s finally paying off - and now it’s snowballing so fast we don’t know what to do! We thought at first it seemed impossible to find deals - now we have too many! We’ve decided not to look anymore - until we see “just this one more”…
The homes I mentioned before - none of them closed. One was pulled at the last minute by the “investor”, the other the lady decided she was not emotionally ready to sell the home her mother had passed away in.
But now, here we are!
First, the biggest lesson we learned - have all your team at the ready! It’s hard to build a team when you’re already running behind! We found financing, a title company, appraiser, handyman/contractor (very trustworthy, and a partner to boot), inspectors (for our own peace of mind on the first deals), roofers, carpet people, etc. but it’s all a cr*pshoot until they do the first one for you.
Closing this week - 3/2 Purchased at $42,000, resale value $65,000, not a rehab; new roof, etc. Section 8 tenant, paying $750/month. Our loan - 75% LTV at 8% = $363.85/month (PI) + $100 (TI) = monthly cash flow of $750 - 483.85 = 286.15. May sell it by the end of year once lease is up - don’t like the area much; depends. Closing costs rolled in to loan - $0 down! (Oh, OK, we paid $100 deposit)
Should close next week - Contract at $48K, 4/2 zoned for duplex, needs roof, good wood floors, comps at $90K (for duplexes) or $75K (for SFH). Will borrow $62,250 from bank (same deal as above), 8K rehab, and probably resell for quick cash (hate to do it - should split into duplex and keep - also has room to build in the back, already zoned - if I can sell another for quick cash, would consider holding long term). If we sell: Cash at close: 11K - 8K rehab = total $3k. At sale: $75K - $62,250 = $12,750 => total $15,750. Minus $100 deposit.
If we revamp and rent as duplex (assume rehab will cost all of borrowed funds)- (2/1 each side), can rent for about $650 each side: total income $1,300. Mortgage payments on $62,250 = $520.68 + $100 TI = $1,300 - 620.68 => monthly income of $679.32.
Fire damaged duplex. 2/1 & 3/1. Only one room has damage from fire; the rest has damage from firefighters. Need re-roof in that room - the rest looks new, no leaks. $15-$20K rehab. Comps: SFH at $75K. No duplexes sold in area in past 5 years, although there are some. On water. Huge yard. Contract price: $28K. Can borrow: $56,250. Cash after rehab = $8,250. Rent 3/1 for $650; 2/1 for $600. Total monthly cash flow: $1250. Mortgage payments: $470.50 + $100 TI. Total income: $1250 - 570.50 = $679.50.
Last, but not least, this one we may partner through an investor - too many at a time for the bank - comps $70K (seems to be the going rate in the neighborhoods we work). Contract price: $45K. Needs roof resealing (Bahama roof) and two ceilings (bathroom, back room) need fixing. Evetything else in great condition, even central air, new water heater - doesn’t even need much paint! Does need tile/carpet. Appliances still in working order. No damage inside. Yard needs work - mostly hauling “stuff” out. Estimated repairs: $6K. Total cash needed: $51,000. Total cash out: $19,000, split two ways, $9,500 each - still not bad.
Will let you know how they turn out. Keep your fingers crossed for us.