We closed on The Poor House this past Thursday, and after some confusion at the closing table (my wife was still in the hospital and needed to sign some papers), the house is now officially ours. Which is good, because renovations were getting underway the day after closing, whether we officially owned it or not…
On Friday, we had our landscaping company come out to remove a couple trees in the front yard. There was termite damage to a couple trees, and one was already precariously hanging over the house. In addition to taking down two trees, they also removed a few too many bushes, so we may have to add some shubbery before we put the house back on the market. The goal was to open up the front view of the house, and we’ve certainly accomplished that goal.
In addition, by the end of this week, we expect the exterior to be completely renovated, with a new roof and all new siding. We’ll also be adding a 200+ square foot deck in the back, and expanding the front porch and steps. New gutters, soffits and fascia will complete the exterior renovations, and then we’ll throw on a new coat of paint to the exterior and the decks; by the time we’re done, hopefully it will look like a new house from the outside.
On Monday, the waterproofing company comes in to install a gravity drain and waterproof the basement. We’ll also remediate all the mold down there, and move one of the basement walls to open it up a bit more.
We’ll also complete major demo on the interior this week. Once we have have the house water-proofed, demoed, and the exterior complete, we’ll go in and make some decisions on what to do with the interior renovations.
I expect it will be pretty much a full cosmetic rehab, but we have a few more decisions to make. We may want to open up a couple walls, we don’t know exactly what type of flooring we want to use, and we may want to redesign the kitchen a bit.
Our budget on this project is $50K, and it wouldn’t be too hard to overshoot that, especially considering that we’ll be spending over $20K on the exterior alone. So, once the major exterior and structural work is completed, we’ll re-evaluate the budget and make the interior design decisions.
Wow seems like a big project. 20k on the exterior is a good budget. I am sure it will turn out awesome. Is this a higher end home?
Steve –
Nope, this is pretty typical in terms of resale price-point. We expect this one will sell for about $130K before concessions.
We’re able to afford the big budget because we bought this one for $33K…so there was a lot of room for spending…
Good, sounds like a great deal. I always like the bigger budget projects, when you start fresh you don’t have to settle on much existing stuff. You using cash for this one, or will the local bank you use finance repairs?
How is the loan on your brothers place coming?
Do you have a plan to keep any SFH in your business plan? After meeting with my accountant and discussing the taxes, it moved forward our plan to start buying and holding 20-30% or more of our purchases.
Hey Steve –
I have a line of credit for rehab loans through a local bank in my area. They provide the purchase and rehab money for 12 months at 6.75% interest, and I just need to put down 20% on each property. For any property I expect to hold at least 3 months, I use them as a lender; for shorter term projects, I generally pay cash.
I do plan to start holding rentals in the coming year. As of now, I haven’t figured out a good long-term financing strategy, so I haven’t started picking up rentals, but I’m working on my buy-and-hold financing plan, and once that is in place, I’ll be accumulating a bunch of rentals.
Hi Scott,
I have newly opened a business account in addition to my personal accounts. And so far has put 3 properties under the new LLC. How can I go about ask line of credit? I have asked it when I opened the account, but was denied. What are good strategy in getting line of credits? Thanks
Rachel
Rachel –
Are you looking for a line of credit specifically for buying houses? If so, you’re probably not going to have much luck with a big bank.
I would recommend visiting the very small, local banks in your area (those banks with literally only 1-3 branches). Take a business plan with you, and let them know that you are looking for short-term rehab funding for investment projects.