Got to Move FAST
The Basics of the Deal:
“Got to Move FAST” was purchased for 52K and as the pictures indicate actually two separate house side by side on once large lot. The houses are individually metered, already had fences marking boundaries and from the street you would have no idea these were on one lot. The house at the Top of the frame was a nice sized 2/1 with the house at the bottom of the frame being a 3/1.
We called this “Got to Move FAST” because we liked the deal the minute we saw it online. We called the listing agent and said we wanted to put in a full price offer (Note I cannot think of any other deal where we paid list price). She wanted us to see the property first and I told her I wanted it locked up and was willing to pay list price and let her double end the commission.
She agreed put it pending and gave us 24 hours to inspect the units. The smaller house was in fine shape with maybe 4K in work required. The large unit needed a new bathroom (Full gut as they say) and new kitchen. We estimated about 12K for the larger unit.
Expected and Initial Plan:
As listed above we initially estimated the house to cost a total of 16K in make ready. The smaller house was estimated to rent for $750 and the large house was estimated to receive $850 in rent.
Actuals:
We ended up spending about 20K on repairs and we rented the 2/1 for $775 and the now 3/1 for $925 for a total of $1,700.
We blew the budget as we decided to stucco the larger house and we added new windows to the larger house as the old ones were rotted out upon further inspections (We missed this on our walk through). We also redid the carport and driveway for the larger house a large tree root had created a nice set of tripping hazards.
Current Status of Property:
We love this property and consider it a long term hold. Our first mortgage is about 28K and we have secured a private money 2nd on the houses.
The private money 2nd has allowed us to keep our capital flowing, provided a secure and nice return for our investor and best of all allowed us to keep the property in our portfolio for a long time. Win-Win-Win
Lessons Learned:
I don’t like paying list price for any real estate deal but sometimes you just have to bite the bullet and pay up. I am happy we did.
Don’t forget to check the window casings more carefully as this added about $1,200 to our budget that we missed.
Securing a private money 2nd on fixed up, rented property is a lot easier and cheaper than trying to get an investor to buy into a vision of what could be. I like showing what is and then using the capital to buy what is next, more protection for both parties.
Grade the Deal and Why:
We give these houses an A as we only have 11K still in the deal because of the private money 2nd. The reason this is not an A+ is because we did go over budget about 4K. About 2k of the overage was not absolutely required but given our plan it was the correct thing to do to stucco the outside of the larger house.
Future Plans for Property:
We have already secured our Private Money 2nd on this property and we will hold for long term.
