Author Topic: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE  (Read 15264 times)

ilsy

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #150 on: January 06, 2019, 08:01:41 PM »
At the beginning I though that you put membrane on 2x4's under the durock, but then I saw a pile of pink 2x4's on the floor. Why are they pink?

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #151 on: January 07, 2019, 10:25:30 AM »
@tralfamadorian  In hindsight, what do you think you would have done differently with this one before getting into contract or during the due diligence period?  Run far, far away, ha!  No, really, with how competitive the market is, there was no time to perform proper due diligence before getting under contract.

What I should have done was get my contractor in after it was under contract but before closing and really go through in detail (although we were unable to get access inside - I should have pushed back harder on this).  We did review the property from the outside and it looked OK.  I did miss a key indicator of the rotted tree in the back, obviously termites, and should have assumed I had termite damage in the house.

Even then, I've dealt with termites before but haven't seen anything this bad.  This is very close to a worst case scenario in that regard.

Anyway - if I had picked up on the tree and then correctly assumed a high impact to the property (I wouldn't have), then I could have forfeited my earnest funds and moved on. 

@ilsy Good question, I don't know.  I used to think the pink 2x4s indicated additional fire resistance but I now understand that to be false or not necessarily the case.  It may mean different things for different lumber mills and/or mean nothing at all.

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #152 on: January 14, 2019, 10:00:46 AM »
Update

Property #1 Rented at $1800/mo

Property #2 Rented at $1595/mo

Property #3 Now rented for $1700/mo. 

Property #4   Completing bathrooms and trying to find an in-stock rear French door that fits. 

Plan is to have this one on the rental market by the end of this month.

Property #5   Appraisal came in well above what I needed, will only have to bring about $10K to close this deal.  Appraisal also noted I was short about 250 sq ft short on my initial estimate (county records are also off). This equals about a $27k increase in overall value, a nice bonus to an already great deal.

Closing will be scheduled for approx. end of next week

Property #6  Exterior repairs completed, termite treatment completed, HVAC install on-going and weíll start insulation and drywall installation this week, paint to start end of this week.

Property #7 Contractor went through Wednesday and it looks like Iíll be right about $30k all-in, perhaps a little less.  Drywall repairs start this week, followed by paint, flooring and the new kitchen.

Property #4 Progress Photos

0087d14fb0510ca9eb56e42306340c420956a863-1 by sam burn, on Flickr

351f9b81d0946df75f708467dbe3476861d91364-1 by sam burn, on Flickr

0812c56777db599aa2c13f49f4aec8fbcf7344e3-1 by sam burn, on Flickr

aa4c0861c7d515e6a37d41eb4460f361003132e4-1 by sam burn, on Flickr

b8415312629bfd2beca561589f6952e55718e84a-1 by sam burn, on Flickr

dd60f7da275d6250ca30b847cf0e8d6d20bf1b7a-1 by sam burn, on Flickr

e22ec8427289eacf1b38ec78a999c9c32ee8ab46-1 by sam burn, on Flickr

f60876ef9519f8c864f59ef8d042dc99d1609835-1 by sam burn, on Flickr

Property #6 Progress Photos


e41b0ceb065674d80fa04a6c62fad70ef0a242de-1 by sam burn, on Flickr

8f43c87e1dfe6312da250a4a675ba7ef9dba20e3-1 by sam burn, on Flickr

5ee3769003f1de7c8b56dfaf593de9f3d27c6dd1-1 by sam burn, on Flickr

4f3aaa3e6ce5a895c7df0a46e50a7203e21eece8-1 by sam burn, on Flickr

2e197426c4dd39f249398162c437a3541f10908c-1 by sam burn, on Flickr

BicycleB

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #153 on: January 14, 2019, 10:04:23 AM »
@sammybiker, congrats on renting out #3!

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #154 on: January 15, 2019, 04:28:22 PM »
Thanks @Bicycle_B - I was very happy to rent it out during this time period. 

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #155 on: January 25, 2019, 07:55:54 AM »
Update

Property #1
Rented at $1800/mo

Property #2 Rented at $1595/mo

Property #3 Now rented for $1700/mo. 

Property #4   Complete except for rear french doors. 

Property #5   Scheduled to close next Friday.  Rehab on this will not start until late May.  Already rented back to the seller.

Property #6  Drywall nearly finished, paint to start Monday.

Property #7 Minor drywall repairs completed, minor roof leaks patched, paint complete, floors nearly finished. Kitchen going in next Thurs/Friday.  Detailed scope of work to follow.

Property #7 Progress Photos

ce9df69e27c2fe7ad01b3f2b4150f6f6cc95677b-1 by sam burn, on Flickr

a9e0ca6fd1f7e9cc11f02f1ab034144cb9462d44-1 by sam burn, on Flickr

4484b0c1611106425d273f5cdff2dee329778c3f-1 by sam burn, on Flickr

6d1e9e7f43e3de7846561d1150d25beae30551e2-1 by sam burn, on Flickr

9e9b879c51184fdd65fc2ecf1add5728588f123f-1 by sam burn, on Flickr

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #156 on: January 25, 2019, 08:04:14 AM »
Property #7 Scope of Work Details

Complete interior paint inside, baseboards, new flooring throughout entire home, brand new kitchen cabinets & granite.  Bathrooms - new vanities, tub/shower refresh, new flooring, new toilet.  HVAC minor repairs, going to try and keep this going for a couple more years.  Minor plumbing and electrical (lighting, fans).  Minor roof repairs.

Paint all-in @ 4000 (labor & materials)

Flooring Install all-in @ 5000 (labor & materials)

Floor Baseboard all-in @ 1200 (labor & materials)

Kitchen Cabinets + Granite all-in @ 5300 (labor & materials)

Kitchen Sink/Faucet all-in @ 300 (labor & materials)

Bathroom Rehab x2 Cosmetic all-in @ 3200 (labor & materials)

New Lighting Interior/Exterior all-in @ 2500 (labor & materials)

Exterior Siding Repairs - minor  all-in @ $2000 (labor & materials)

Minor HVAC Repairs all-in @ $2000 (labor & materials)

Minor Plumbing all-in @ $1800 (labor & materials)

Minor Roofing Repairs all-in @ 700 (labor & materials)

Misc all-in @ 2000

TOTAL @ 30,000
« Last Edit: January 25, 2019, 08:05:54 AM by sammybiker »

getting there pnw

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #157 on: January 30, 2019, 05:00:59 PM »
Nice work.

Great thread. Inspiring and useful.

I'm just about done with my first flip near the Seattle airport. I put way too much money into it. Should have painted the existing cabinets, for example. Would you ever tear out existing undamaged cabinets? Any other thoughts on finding that line between a frugal remodel and too frugal? For example, I think we made the right decision to blow out the kitchen walls to open up the kitchen to the dining and living rooms, but I don't really know.

Thanks.

Padonak

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #158 on: January 30, 2019, 06:46:27 PM »
PTF this great thread.

What's a property wholesaler? Is that an individual or a company? Where do they find deals and what's a normal profit margin for them? If it's so profitable to rehab and sell or rent a house, why don't wholesalers do it themselves?

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #159 on: January 31, 2019, 05:27:39 AM »
Thanks @getting there pnw

Congrats on completing your flip.  I imagine for a flip, you would want a brand new kitchen.  As my properties are rentals, I will try and salvage the cabinets and paint over, install granite and new hardware vs brand new kitchen. 

What are the numbers on your flip?  Best of luck on the sale side.  I'm from WA originally, lot of family on the West side and also on the East side, Spokane area.  Texas can't compare.

@Padonak   Thanks.  A wholesaler is an individual (or a company) that will market for sellers directly, based upon various lists they can pay for or pull manually from city/county records.  Lists such as probate, foreclosures, etc. 

They'll contact these people directly and attempt to negotiate a quick cash deal.  Once they have that deal under contract, they'll add their mark-up and go market that deal to their investors - guys like me.  When I close on the property, they make their money and hopefully everyone walks away happy.

Normal profit margin varies.  I've seen some make only $3K but more recently I see them make quite a bit more.  I think on property #7, the wholesaler made $10k.  Pretty impressive for what was probably less than a few hours of work and very little risk on his end.

Going back to the wholesaler of property #7 - he's a good friend of mine so we share details of our business to each other.  He buys only in certain areas, not this area, hence he didn't want the deal himself.  In addition, he's going after 20+ unit multi-fam and not single family homes, even if they have a $40k+ spread on them.

I should note, there are marketing expenses for the wholesaler, of course.  I don't know exactly what his expenses are but I imagine he's spending at least $8k a year on letter mailing/direct marketing.  But obviously, 1 deal more than makes up for that and anything more is his profit.

In addition, when he comes across deals in his farming area, he'll cherry pick and perform a full flip on it.
« Last Edit: January 31, 2019, 07:59:23 AM by sammybiker »

getting there pnw

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #160 on: February 01, 2019, 04:44:59 PM »
My numbers are embarrassing (I spent too much for the neighborhood), but I'll try to post anyway. Bought for $374k. Put like $90k into rehab, including $13k to a "handyman" that I work with every weekend, plus $20k for a GC and team to install all the cabinets (thought I was going to do that myself) and also to do all the drywall. I do most of the work myself on weekends while keeping my day job.

Held it for 16 months. Transaction and carrying costs combined will come to about $60k. Those numbers are rough, but close. I had a hard money loan to buy at auction with 2% up front and 1% per month for two months. All that said, break even will be about $520k. Gonna put it up in a week or two. Need to do some landscaping still. In fact, still trying to decide whether to attempt that this weekend or pay to have it done.

getting there pnw

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #161 on: February 01, 2019, 04:47:51 PM »
Yah, Washington state is gorgeous. Do you think you could do what you do in the Seattle area? Maybe Tacoma are? Spokane?

tralfamadorian

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #162 on: February 01, 2019, 06:13:13 PM »
Good luck with your flip @getting there pnw ! Starting out is tough, particularly in the flipping side of the business. What are you planning on listing for?

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #163 on: February 03, 2019, 09:44:20 AM »
I'm curious as to what your target exit price is @getting there pnw

That's a long hold time and some big numbers for a single family.  Must make my $50k purchase price here look like a joke. 

I purchased one of my first houses in Ohio for $11k in very early 2014.  An amazing 2br/1ba cottage style stucco home with beautiful hardwoods throughout, a small but functional and cute kitchen and two perfect bedrooms.  I think I put $5.5k into the rehab and it's rented consistently for $700-750 ever since.  That same home, in the right location, would be an easy $600k+ home in Capital Hill or elsewhere.

Everything is relative.  Anyway - hope your exit price works out well.

**And no, I don't think I could do what I do in Seattle, Tacoma or Spokane.  I looked at Spokane real hard and was making offers in the area...but the rents are just too low for the purchase price.  But especially around Perry District on South Hill...just a wonderful area to live in/own in. 

Dicey

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #164 on: February 03, 2019, 09:57:01 AM »
My numbers are embarrassing (I spent too much for the neighborhood), but I'll try to post anyway. Bought for $374k. Put like $90k into rehab, including $13k to a "handyman" that I work with every weekend, plus $20k for a GC and team to install all the cabinets (thought I was going to do that myself) and also to do all the drywall. I do most of the work myself on weekends while keeping my day job.

Held it for 16 months. Transaction and carrying costs combined will come to about $60k. Those numbers are rough, but close. I had a hard money loan to buy at auction with 2% up front and 1% per month for two months. All that said, break even will be about $520k. Gonna put it up in a week or two. Need to do some landscaping still. In fact, still trying to decide whether to attempt that this weekend or pay to have it done.
Wow, that sounds like you signed up for an extended course of study at the School of Hard Lessons. I hope you gained some valuable insights and can still manage to eke out a small profit. Ouch.

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #165 on: February 03, 2019, 09:39:30 PM »
Update

Property #1 Rented at $1800/mo

Property #2 Rented at $1595/mo

Property #3 Now rented for $1700/mo. 

Property #4   Complete except for rear french doors.  The refi is verbally approved, just waiting for the appraisal that should be coming next week (week of 11-Feb).  A little bit of drama with the new bank and getting everything together to make them happy.  This is my 2nd refi with them and it definitely has me missing the relationship I had with my first bank.

Property #5 I signed closing papers and 2 of the 3 sellers have signed, the 3rd one is a mail away.  Rehab on this will not start until late May.  Already rented back to the seller.

Property #6 Paint mostly complete, kitchen paint is just about done, just need to start reinstalling the kitchen cabinet doors and then install new hardware.  Flooring should start end of this week.  I feel a lot better about this property after walking it yesterday with my contractor.  The opened up kitchen to the now enclosed former porch, now dining room, looks fantastic.  Once we finish with the light cans, flooring, granite throughout including the huge kitchen island, the property will look great.  I dropped off the vanities this morning as well as toilets, sinks, mirrors and some other misc bits and pieces.

Went over budget a bit with my electrician.  I need to replace him as he continues to go up in price and heís pulled a couple shady moved in the past.  That said, at this point, he shows up promptly and gets the job done asap, so Iíll ride it out for these last two properties.  Updated photos shown below.

Property #7 Kitchen is in, waiting on granite.  Finishing up bathrooms.  The paint and floors look fantastic, I think I finally nailed on the perfect grey (Repose Grey Sherwin Williams #7015 if anyone is interested).  Itís light enough that it goes well with the dark floors but can also be used with lighter grey floors.  I love it.

Updated photos shown below.

https://www.sherwin-williams.com/homeowners/products/SW7015-reposegray/7015#/7015/?s=coordinatingColors&p=PS0

Property #7 Progress Photos

761BF1F0-A8B6-4748-80AD-7B35E408BC0E by sam burn, on Flickr

EC99C305-1A4A-40A8-9203-D018F8D6434D by sam burn, on Flickr

7201B307-4FE6-4640-A459-1927AF03ABC8 by sam burn, on Flickr

BE6DC7D7-2404-4DA6-9EC0-ACFAF3A1BA13 by sam burn, on Flickr

C92CA13D-2E4F-4C69-A5C5-AFA308520B33 by sam burn, on Flickr

FD0702C6-6CB7-4155-AC0B-136B47EAF8D1 by sam burn, on Flickr

Property #6 Progress Photos

30DEA8CC-F5E8-4157-BFDD-1EE57BB9D59A by sam burn, on Flickr

0DFCC7FA-0EFA-4E26-A1D8-CC2A3D53C474 by sam burn, on Flickr

7F840D4C-1B4C-4023-B4FF-CE9C1EAB3102 by sam burn, on Flickr

8D7340A3-3FEC-4B8E-A2CF-55FA632A0CA7 by sam burn, on Flickr






« Last Edit: February 12, 2019, 10:25:29 AM by sammybiker »

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #166 on: February 12, 2019, 12:10:34 PM »
Update

Property #1
   Rented at $1800/mo

Property #2   Rented at $1595/mo

Property #3   Rented at $1700/mo.

Property #4
   Rehab is complete.  Appraisal is this Thursday and I'm shooting hard for $232,000 aka $105/sq ft.

Professional photos to follow and this will be on the rental market sometime next week.

Property #5  I formally closed on this last week and it's rented back to the sellers until May when I can get in and perform a cosmetic rehab.

Property #6   Flooring has started.  Porch enclosure is now complete, increasing the sq ft by ~320.  Granite will go in late next week once flooring has wrapped up.

Property #7   Rehab is complete with the exception of some minor exterior repairs that I'm bidding out.  I'll update later this week/next with final value numbers and rent rates.  Professional photos to follow and this one is now on the rental market.

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #167 on: February 19, 2019, 04:15:16 PM »
Update

Property #1
   Rented at $1800/mo

Property #2   Rented at $1595/mo

Property #3   Rented at $1700/mo.

Property #4
  Appraisal came back today at $236,000 or $107/sq ft -woooooo! My all-in costs were just shy of $142k, so I'm capturing $94k worth of equity on this one, making it the best so far.  This is great, considering it's not my favorite rehab - I cut some corners by leaving parts of the existing bathrooms in place, leaving the tile floors (ugly color, don't match the rest of the house), not doing any work to the exterior or replacing the windows.  That said, it's a rental and it appraised, so I'm happy.

The final professional photos are below.

Property #5  It's rented back to the sellers until May when I can get in and perform a cosmetic rehab.  No change.

Property #6   Flooring is just about finished, baseboard starting today.  Granite will go in Thursday.  Progress photos are below.

Property #7   Complete (appliances purchased, awaiting delivery).  No appraisal as I refinanced this one already at tax value (only pulling about 50% equity out).  I did pull recently sold comps and I'm coming up with $91/sq ft.  At 1648 sq ft *$91/sq ft = $150,000. 

I'm all-in at $112k, capturing $38k in equity. The home is still on the rental market.  The final professional photos are below.

Property #4 Final Photos Below

P1133408 (1) by sam burn, on Flickr

P1133397 by sam burn, on Flickr

P1133398 by sam burn, on Flickr

P1133396 by sam burn, on Flickr

P1133394 by sam burn, on Flickr

P1133391 by sam burn, on Flickr

P1133390 by sam burn, on Flickr

P1133405 by sam burn, on Flickr

P1133402 by sam burn, on Flickr

P1133404 by sam burn, on Flickr

P1133389 by sam burn, on Flickr

P1133388 by sam burn, on Flickr


Property #6 Progress Photos Below

35645fd6076c68fcb7156eeb815cb9b183c3d8cf-1 by sam burn, on Flickr

f9202ba2bf265df22c1b211cb8f00f401c94d392-1 by sam burn, on Flickr

8a1b02267f15a0c15186dedb1df76496ffb6da2c-1 by sam burn, on Flickr

f5e4a0c80e2b757748bf13382054e2e03a67f70a-1 by sam burn, on Flickr

77a12592724b4d4d313a16f51b0fe06eca901246-1 by sam burn, on Flickr

fee3b0c54549ecfec40b81dd7018560e8ea184e2-1 by sam burn, on Flickr


Property #7 Final Photos Below

P1133409 by sam burn, on Flickr

P1133412 by sam burn, on Flickr

P1133410 by sam burn, on Flickr

P1133411 by sam burn, on Flickr

P1133414 by sam burn, on Flickr

P1133416 by sam burn, on Flickr

P1133417 by sam burn, on Flickr

P1133420 by sam burn, on Flickr

P1133423 by sam burn, on Flickr

P1133424 by sam burn, on Flickr







« Last Edit: February 19, 2019, 04:23:21 PM by sammybiker »

Steeze

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #168 on: February 19, 2019, 08:09:12 PM »
PTF

This thread makes me feel like I am doing something wrong with my life! Congrats on your success.

BicycleB

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #169 on: February 19, 2019, 10:52:20 PM »
#4 at 94k equity gain, wow!

Dicey

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #170 on: February 19, 2019, 11:14:02 PM »
Awesome progress! I love your updates. Erm, is it just an optical illusion in photo 1133405? That toilet access looks really, really tight.

Another Reader

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #171 on: February 20, 2019, 06:03:25 AM »
Awesome progress! I love your updates. Erm, is it just an optical illusion in photo 1133405? That toilet access looks really, really tight.

Yeah, my thought as well.  Not sure there is code for toilet access, but it could be a problem for prospective tenants with any mobility issues.

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #172 on: February 20, 2019, 07:32:47 AM »
@Steeze   Thank you.

@Bicycle_B   Thanks, it was a great deal. Cashflow on this from a rental stand point will suffer, however (I'm taking out the full 80% of appraisal value).

@Dicey  Thanks and you're right, it's tight.  Property management will look at it - worst case, we're swapping out the vanity for something smaller to allow access.

@Another Reader Thanks AR, agreed.  We rebuilt the bathroom as it was before (toilet and shower location left unaltered) but I think the vanity is encroaching, making it a tight fit. 

NonprofitER

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #173 on: February 20, 2019, 10:00:36 AM »
Forgive me if you mentioned it already and I missed it, but can you share how you structure your payment to the project manager/boots on the ground point person?  Does he get a percentage of the ARV, a payment per project, or payment by day/week?  Obviously you're working well together as a team, but just curious how you've structured his portion and if there are any financial incentives for him (or the construction team) to finish on time (or bonuses for finishing early)?


sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #174 on: February 20, 2019, 11:27:58 AM »
@NonprofitER I used a PM/coordinator for the first two projects and for each project, he earned $1800 split between a 50% kick-off payment ($900) and a 50% completion payment ($900).  We had an agreed upon schedule and budget and his job was to manage it to the best of his abilities.  There were no further incentives or milestones associated with his scope. 

After seeing how well the first two went, I dropped the PM/coordinator and worked directly with the contractor with no local PM/coordinator.  Back-up plan would be to reengage the PM/coordinator if things went sideways.

The contractor and I work as follows:

- Roughly on a 33% milestone payout - on a drywall/paint/flooring/exterior job, I'll make 1 payment after drywall & paint is complete, 1 payment after flooring is complete and the final payment after exterior is complete, for example. 

- No upfront payment, he works first, then gets paid.

- I supply bulk materials, he will supply consumables and occasionally some bulks that I missed/wasn't able to get.  All materials he supplies are reimbursed upon proof of receipt + 10% handling charge for his time.

- Some subcontractors (plumber, roofers, etc) are paid by my prime contractor and I reimburse him.  No identified mark-up. There is a risk that my prime contractor marks up their prices, of course, and I do anticipate this happens occasionally.  Do I care?  Not really.  His referenced subs have been good, show-up on time and knock the work out.

- Other subcontractors operate separate of my prime contractor and I pay them directly (HVAC, garage door folks, mold inspections, etc).  But at this point, everyone knows each other and communicates without me having to get too involved, generally.

Hope this helps.

NonprofitER

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #175 on: February 21, 2019, 10:53:14 AM »
Super helpful, thanks.

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #176 on: February 27, 2019, 08:54:02 AM »
Update

Property #1  Rented at $1800/mo

Property #2   Rented at $1595/mo

Property #3   Rented at $1700/mo.

Property #4 On the rental market for $2200/mo.  I feel slightly uncomfortable asking this much but I'm going to try.  Feeling of discomfort isn't validated by fact, just emotional discomfort...never had a house rent for so much.  Will drop to $2000/mo if we don't get any bites over the next couple of weeks. 

Meanwhile, I'm waiting for the $189k refi to hit my account.

Property #5  It's rented back to the sellers until May when I can get in and perform a cosmetic rehab.  No change.

Property #6  Flooring is finished, granite is in.  This nightmare rehab is slowly coming to an end.  My plumber that has worked on all of my other properties is tied up for the next two weeks, so I had to bring in someone new, a good friend's contractor.  He's been doing great work this week doing odds and ends.  I'm very thankful for my local network.

Updated progress photos showing the granite are below.

Property #7  Now rented for $1600/mo.

Property #6 Progress Photos

59ede852da19757781808783a6930668d6b5bcc5-1 by sam burn, on Flickr

81ad8ffa3eeb648e55a6fdd4c9c2971ae7e3b4ea-1 by sam burn, on Flickr

2c6bf959dbf09304686f7d852e282b8261d6932c-1 by sam burn, on Flickr


sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #177 on: February 27, 2019, 12:42:13 PM »
A summary update of this challenge thus far, including some forecast data points.

*You'll see Property #6 forecast equity has dropped dramatically as that scope of work grew and grew with the problems that continued to crop up.  The scope on this project grew from approx. $30k to $65k.

**You'll also see monthly cashflow for Property #5 & #7 grow dramatically - this is because I only refinanced about 40-50% LTV, leaving a ton of equity in the properties (reducing my mortgage payment) while still commanding top rent.

Property #1 Equity Earned: $83,000 Monthly Cashflow: $250

Property #2 Equity Earned: $42,000 Monthly Cashflow: $375

Property #3 Equity Earned: $42,000 Monthly Cashflow: $400

Property #4 Equity Earned: $94,000 Monthly Cashflow: $200

Property #5 Equity Earned: (forecast $77,000) Monthly Cashflow: (forecast $800)

Property #6 Equity Earned: (forecast $15,000) Monthly Cashflow: (forecast $350)

Property #7 Equity Earned: $38,000 Monthly Cashflow: $650

Equity Earned vs Goal (including forecast): $391,000/$200,000

Monthly Cashflow Earned vs Goal (including forecast): $3025/$1625

Another Reader

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #178 on: February 27, 2019, 12:49:21 PM »
My guess is once you subtract out depreciation, this cash flow will add very little to your taxable income.  Double win!

BicycleB

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #179 on: February 27, 2019, 12:54:37 PM »
@sammybiker, are these cash flow estimates before or after estimated costs for ongoing maintenance?

Do you include any allowance for vacancy, or is this the cashflow assuming 100% occupancy?

sammybiker

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #180 on: February 27, 2019, 01:30:27 PM »
My guess is once you subtract out depreciation, this cash flow will add very little to your taxable income.  Double win!

@Another Reader That's my hope! 

@Bicycle_B Cashflow estimates include a small on-going maintenance % but I've kept it smaller than a lot of my other portfolio as these were freshly renovated.  Vacancy is included.

I owe the thread a breakdown of my fixed & projected expenses and how I come up with my cashflow numbers.  I'll put this together and post it up eventually.

Property #7 for example (rented for $1600) - my mortgage is $430/mo.  Insurance is dirt cheap ($35/mo?  I'll have to double check this), taxes $160/mo, repairs & vacancy $160/mo, throw another $50/mo towards capex and $100/mo for property management. 

BicycleB

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Re: Making 200k in equity in 6mo - Back down the rabbit hole, long distance RE
« Reply #181 on: February 27, 2019, 01:42:20 PM »

@Bicycle_B Cashflow estimates include a small on-going maintenance % but I've kept it smaller than a lot of my other portfolio as these were freshly renovated.  Vacancy is included.

I owe the thread a breakdown of my fixed & projected expenses and how I come up with my cashflow numbers.  I'll put this together and post it up eventually.

Property #7 for example (rented for $1600) - my mortgage is $430/mo.  Insurance is dirt cheap ($35/mo?  I'll have to double check this), taxes $160/mo, repairs & vacancy $160/mo, throw another $50/mo towards capex and $100/mo for property management.

Thanks!

tralfamadorian

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A summary update of this challenge thus far, including some forecast data points.

*You'll see Property #6 forecast equity has dropped dramatically as that scope of work grew and grew with the problems that continued to crop up.  The scope on this project grew from approx. $30k to $65k.

**You'll also see monthly cashflow for Property #5 & #7 grow dramatically - this is because I only refinanced about 40-50% LTV, leaving a ton of equity in the properties (reducing my mortgage payment) while still commanding top rent.

Property #1 Equity Earned: $83,000 Monthly Cashflow: $250

Property #2 Equity Earned: $42,000 Monthly Cashflow: $375

Property #3 Equity Earned: $42,000 Monthly Cashflow: $400

Property #4 Equity Earned: $94,000 Monthly Cashflow: $200

Property #5 Equity Earned: (forecast $77,000) Monthly Cashflow: (forecast $800)

Property #6 Equity Earned: (forecast $15,000) Monthly Cashflow: (forecast $350)

Property #7 Equity Earned: $38,000 Monthly Cashflow: $650

Equity Earned vs Goal (including forecast): $391,000/$200,000

Monthly Cashflow Earned vs Goal (including forecast): $3025/$1625

Great summary update @sammybiker ! I think your threads are some of the most useful in demonstrating how powerful a wealth builder properly chosen real estate can be.

Question now that you've done several of these in a row- what have become your favorite sources for materials? Paint, LVP, cabinets, appliances, etc?

pmac

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Are you factoring in the cost for your time into these calculations.....


or are you working for free?????


sammybiker

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@tralfamadorian Thanks, I appreciate that.  Agreed, RE can/is a real wealth builder.

Re: materials, I used HomeDepot for the most part just because it's hard to beat their prices and they are always there to go get more if I bust my material take-off.  Cabinets are from a local company and they started pretty high but the last few projects, really came down in prices (30% drop), paint is all from Sherwin Williams.  Appliances are from Sears and I try to wait until they have sales. 

@pmac  No, I haven't calculated my time into these numbers.  That said, I'm not swinging the hammer (although I have drilled a couple screws) and I most certainly have spent more time updating and interacting with this thread than truly working on the project.  After all, I've been either outside the country or 2,000 miles away for the duration, so.

If you're looking for cracks in my numbers, I would focus on lack of reported holding costs (insurance, utilities, lawn care) as well as financing costs. These round up to about $20k cumulative for all (7) properties.  You could get real gritty and ask about flights to the projects, rental cars, etc.  I'm fortunate that these are provided by my day job, so I'm not sure how to account for them (I don't).

sammybiker

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Update

Property #1 Rented at $1800/mo

Property #2 Rented at $1595/mo

Property #3 Rented at $1700/mo.

Property #4 This had been on the rental market for $2200/mo for a couple of weeks with only one bite.  Dropped the rental price to $1950/mo on Thursday last week and the response was strong.  Then we got a (good) call from an insurance company on Friday.

A family had lost their home to a fire last week.  They had quality insurance coverage and my property was about the only one on the rental market that would keep the kids in the great local school and had the 4 bedrooms they needed.  The insurance company offered $2300/mo for a six month lease, month to month afterwards at the $2300/mo rate.

Done.  We're scrambling now to wrap up a few make ready items.  The family came in with a deposit on Friday afternoon, moving in on Tuesday.  My hope is to negotiate a lease extension after the six months but we'll see what happens.

Deposit and rents are paid for by the insurance company, direct deposit every month.  Love it.

Still waiting for the $189k refi to hit my account.

Property #5 It's rented back to the sellers until May when I can get in and perform a cosmetic rehab. No change.

Property #6  Property has been turned over to property management.  We have a solid make ready punchlist but overall the property looks great.  No updated photos but I'll have the final pro pictures ready in a couple of weeks.

Thinking this will rent for $1500/mo.  Will be on the rental market in another week.

Property #7 Rented at $1600/mo.

tralfamadorian

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Awesome on the insurance rental.

It's the first time in awhile that you haven't had some properties in the pipeline. Are you taking a break and letting things settle? Or is the inventory of flood distressed properties slowing down?
« Last Edit: March 18, 2019, 04:29:38 PM by tralfamadorian »

sammybiker

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Thanks @tralfamadorian

Correct, the pipeline isn't what it was a few months ago and I'm ready for a break on the buying/rehabbing.  My immediate game plan is to stabilize the portfolio, eliminate any remaining short term debt and really try and get the first one, maybe two, properties paid off by end of 2019 (super aggressive).  A couple project ideas are on the back burner and I hope to kick one of them off later this year, but all of the above needs to happen first. 

This thread has been a lot of fun for me and I'll start another one if/when I move in another direction.  Really thinking of going after some flips and trying to flip my way to mortgage pay-off, tracking as I go.  Something nuts such as paying off (5) properties in 18mo using flip profits.  We'll see.

I have the team established and I want to leverage that before I lose them.

The inventory of flooded properties has slowed a bit but there are still properties hitting the market. The local investors think there is a second wave coming soon as banks that have just now completed the foreclosure process of Harvey properties turn around and place these on the market. 

Of course, these would be the worst properties, assuming they'e never been gutted - but maybe the banks will do some gut work, like how they would go put new roofs on properties (and other such improvements) during the '08 crisis to motivate foreclosure buyers.

We'll see!

Trifele

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Congrats on the insurance deal on Property #4 @sammybiker -- that is fantastic. 

A question for you -- apologies if I missed a discussion of this somewhere in your awesome thread.  Did Houston or other towns in Harvey's path do any kind of future flood forecasting, to decide whether some flood-damaged properties should not be rehabbed, but rather destroyed?  If the state or cities didn't do that, you would at least think that the insurance companies would do their own risk analysis and set their rates accordingly.  But judging from the reasonable insurance rates you are getting, it looks like the insurers think future flood damage is unlikely? 

In my hometown (midwest) there was a serious flood about 10 years ago, and city acquired/condemned a bunch of properties and forbade rehab or rebuilding in certain areas.

Thanks!

sammybiker

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Thanks @Trifele

Short answer to your question is yes.  Specifically in my market, not far from a lot of my properties, there is a small town (same county I invest in), great school district, awesome neighborhood, that was just too low.  Some of the neighborhood is X-flood zone (aka non-flood zone), others are zone A or AE, which are true flood zones and the ones that insurance companies jack up the rates for.

My insurance will write a policy if 1) property is in X-Flood zone (aka non-flood zone) and 2) if it's only had one claim in the last 10 years (Harvey)

In this small town, there are some properties that were deemed rebuild restricted unless you go and raise the property.  And some people have done it!  They love the area and they've jacked up these beautiful single family properties to get over whatever flood threshold.

To compound things further, this city was annexed from a good school district to the best local school district shortly after Harvey.  So buyers are still going nuts in this area and there are some flippers that are flipping and for solid margins.  And I guess as long as you're in an x-flood zone, you're OK.  Until fema rezones....then I imagine selling might be an issue.  But folks here would likely still buy...flooding every few years seems almost accepted (this small town has gone through 3 or 4 flooding events since the early 90s but nothing on the scale of Harvey).

A couple youtube vids of this specific town...

https://www.youtube.com/watch?v=I4jCYBWyc_A

https://www.youtube.com/watch?v=fkNXv3Gi5BQ

Trifele

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Thanks @sammybiker -- very interesting.