So, I’ve been MIA for awhile! I’m sorry!
We’ll have more regular updates over the next several weeks as we transition from our latest rental property rehab to some DIY projects around our house in anticipation of our baby girl’s birth in late October. My wife is ready to kill me as I haven’t even started the nursery 😮
Until then, I have a lot to share – we recently completed the rehab of our first rental property, bought a second one and are on the lookout for a third. It’s been an interesting journey thus far, with far too many “Oh shit, I didn’t budget for that” moments and late nights to boot.
Construction is well on its way in all corners of the rental property – from stripping wallpaper in each of the eight rooms and hallways, demoing the waterlogged walls in the basement, interior waterproofing and most notably, rehabbing the kitchen!
Our plans for the kitchen are as follows:
- Update flooring in the kitchen and hallway with either tile or luxury vinyl tile
- Put in new granite countertops and backsplash
- Install new cabinet hardware (nobs and pulls)
- Replace light figures (there’s a ceiling fan in the kitchen!)
To keep within budget, my wife and I decided to keep the existing cabinets. While we originally wanted to replace them, the cabinets are in tremendous shape and are only a few years old. We’re optimistic that new flooring, cabinet hardware,backsplash and colorful granite will be sufficient to give this kitchen the updated look it deserves.
We just wrapped up demoing the existing square white (beige?) tile backsplash and removing the old countertops. Next step is to install drywall and select our finished – the fun part! We’ll be sure to keep you in the loop!
My apologies for going radio silent, but last week my wife and I were vacationing with her family in Florida and I tried my best to stay away from any form of electronics. The best thing, aside from the R&R, was we closed on our latest rental property! Woo!
What struck me the most during the latest walk-through was the volume of personal belongings left in the house – clothing, shoes, a used toothbrush, partially filled coffee cup, paperwork, unused spices in the kitchen and even an old pair of pantyhose that were drying in the shower. The home smelled of moth balls and vermouth. What should be clear by now is that we purchased this home from an estate. These were all things I overlooked when we first walked through the property – I was too focused on the foundation, electrical panel, leaky basement walls and nearly collapsed garage.
As I was cleaning out all of the personal belongings, I began wondering what the previous owner was like. There wasn’t much to go by, but here is what I could deduce:
An old Italian woman, Mary, lived in the home since 1973. She was the president of the local chapter of the Order of Italian Sons & Daughters. From what I could gather from all Mary’s belongings, she organized fundraisers for the local chapter, was an avid cooker and a presumably a heavy smoker considering all of the ash trays (15+) I found. Her husband passed away many years ago, but she kept pictures throughout the house.
As I was cleaning out all of the belongs (it was mildly depressing), I couldn’t help but look through some of her paperwork. In her desk drawer I found 38 beautiful prayer cards – probably from the funerals of all her friends that passed over the years. 38! Some were young, but most were old like Mary. I wonder if she was the last of her friends to go? It puts all of those part arguments you may have had with friends into perspective.
Anyways, that was my 15 minutes of emotion. The house is now clear of clutter and ready for rehab. Let the fun begin!
We should formally close on our latest investment property within the next week. We’re trying to move as quickly as possible, but as we’ve come to realize over the last several months the process doesn’t always go smoothly. There are a few liens on the property that need to be sorted out, but we’re hopeful they will be squared away.
In the interest of being ready to begin rehab on Day 1, we’re meeting with our contractor this weekend to discuss what work needs to be done. Aside from paint, a new garage, waterproofing and other mundane items, the house is in need of an updated kitchen.
Could I keep the existing cabinets and rent the property as is? Yeah, most likely. However, my mentor has showed me a fully renovated kitchen can drive a 10-15% increase in rents — at that rate, the cabinets will pay for themselves in less than a year. Aside from the monetary benefits, such renovations attract a more quality tenant, support higher appraised values and, in general, are a positive for the community.
We’ll likely tinker around with the layout to better accommodate appliances, but for now we’re trying to decide on which style to use. Our options are below – what are your thoughts? I’m leaning towards the first option, but with a different flooring / backsplash combination.
Last week I wrote about how I adjusted my strategy to better compete with professional investors. Well, it seems as though it’s worked! My very patient Realtor send me a one line email this morning that read, “Congratulations we have a deal! I will have a signed contract back to you today!”
My response? “Well, I guess we should go check out the property to see what I’ve gotten myself into!”
The property in question is located in a working class suburb with a decent school system. I know the area well as I lived just a few blocks away until I was six. It’s not the most ideal neighborhood to flip as property values have not recovered materially since the real estate crash, so we intend to rent this one out.
Since I haven’t walked through the property, fingers crossed the rehab is only cosmetic.
Photos after the jump. You say dingy, I say opportunity 🙂
Seller recently updated the siding. Cute!
Cabinets were recently updated, but I’m not a fan of the color. Replace or stain?
Cute built ins! Carpet has to go!
Ugly now, but looks promising!
Oh no! After being under contract to purchase our first flip, we had to back out of the deal after the general inspection brought to light some serious issues!
I mentioned in a previous blog post that trying to buy a home in the winter is miserable. With foreclosures, typically the heat and power are switched off, the driveway is covered with a foot of snow and the overall condition of the home is questionable. Aside from those physical unpleasantries, the snow in particular makes inspecting the exterior of a home problematic. If I can’t see the driveway, roof or enter the garage, how will I know if they’re in need of repair? I do rely on Google Maps satellite view to a certain extent, but even that is only somewhat helpful given that the photos may be a few years old.
To ease our minds, we hired a general inspector (as any homebuyer should) to get their take on any major issues with the home. And wouldn’t you know, there were quite a few big ticket items! The biggest of which was the $14,000 needed to build a brand new garage – something we didn’t get to inspect ourselves due to a large mound of snow blocking entry into the structure. A slight oversight on our part, but alas that’s what inspectors are for.
Regardless of these issues, the home was still a great opportunity – but not at our initial offering price. So, we went back with a meaningfully reduced offer, which they didn’t even consider. The search continues!
We put in our sixth offer in the last three months on a beautiful two-family property earlier this week. It’s a short sale, so it may take some time to close, but negotiations have been going well thus far. It needs quite a bit of work, but we’re excited by the opportunity to restore the home to its former glory.
This blog will serve a journal tracking the growth of what I hope one day to be a sustainable real estate investment business. I have high aspirations and have learned that putting goals in writing creates an environment of accountability. If you know what I want to build, then I am more inclined to do it. I’ll share those aspirations at some point, but will for now will focus my writing on the first step…our first flip.
With all that said, do you know anyone who would like to buy a house? If all goes according to plan, we’ll be selling a beautifully renovated home in about six weeks.