Here are some pics of Day 1 rehab:

Front of House

Basement View

Another Basement View

Installation of Gravity Drain

The waterproofing completed yesterday, and the roof should be complete by the end of today. Tomorrow we start the residing, and then the rebuilding of the front and rear decks. Hopefully, by the end of the week, the exterior of the house should be ready for painting…

I really hate backing out of deals, but there were three reasons we backed out of this one:

1. The title company was having issues getting clear title to the property. We were supposed to close on Tuesday of next week, and when they realized that they couldn’t close on Tuesday, they sent us an extension for TWO WEEKS. Experience has taught us that if they feel the need to extend closing by two weeks for title issues, it very possibly going to be much longer than two weeks;
2. The seller (Fannie Mae) has a rule where on all their REO properties, they put a restriction on the deed that keeps us from reselling the house for 90 days from the date we purchase it. While we’ve gotten used to not being able to sell to FHA buyers for 90 days, this restriction would mean we can’t sell to anyone for at least 90 days. We’ve run across this issue on a few prior properties, and every time we’ve requested that the seller remove that restriction, they’ve done it for us. This time they said no, and wouldn’t budge. This would make it very difficult to sell this property before February or March given the closing delays, the 90 day restriction and the end-of-year holidays;
3. Lastly, we did a more formal scope of work and budget, and realized that not only was this going to be a big rehab, but we’d barely make an average profit on this deal. Given the two issues above, it’s just not worth a lot of work and a relatively small amount of money. Had the profit potential been bigger, or had the seller been more reasonable, we would have happily waited for the title issues to get resolved; but given the overall situation, we’ve decided to go find a better deal…there are plenty out there.

So, I guess that leaves The Poor House as our #13…hopefully we’ll get this one closed in the next couple weeks and break the streak of unlucky 13…

By the end of the week, the painting should be complete, the reglazing of the windows should be done, the light fixtures should be installed, and we should be ready for the HVAC installation, the cabinets, the flooring and the finishing touches.

We also had a survey completed this week, and found out that the lot is over half an acre. Once the privacy fence went in, we really exactly how big the lot was; the fenced area is huge, and half the lot is still outside the fence.

Here are some pictures of what’s been done since the last video was posted:

Back View of House

Tiled Fireplace (partially covered for painting)

Tiled Shower (almost complete)

View of House From Backyard

View of Backyard from Back Deck

View of Backyard from Upstairs Bedroom

Our Watchdog

House #11: The Sunglasses House

We made great progress at The Sunglasses House today, with three crews of contractors working from sun-up til sun-down. The old roof came off and the new roof went on, the polybutylene plumbing was torn out and completely replaced with CPVC, and a bunch of our general GC work was completed, including finishing the demo, repairing some sub-floor damage (forever trapping my sunglasses!!!), doing some exterior carpentry, and some other small tasks.

Tomorrow, we will have the rough plumbing inspection, and our main rehab crew will come in and start repairing the exterior of the house. They’ll spend the next week replacing much of the siding, replacing the gutters, repairing a lot of wood and trim, and then prepping and painting. After that they’ll move inside, where they’ll replace all the missing and damaged drywall, prep and paint, and start replacing the lighting and plumbing fixtures.

That crew will pretty much be working around the clock for the next two weeks, after which we’ll bring in the flooring, cabinets, and deal with the final details.

(And yes Steph, I’ll even be posting some video in the coming week or two!)

House #12: The Mini House

The Mini House rehab pretty much completed today! This week we cleaned and replaced the flooring, installed the appliances, fixed the garage door, and replaced all the outlets, switches, cover-plates, phone jacks, and the other tedious little stuff that makes the house look finished.

Tomorrow, we will have our cleaning crew in to do our final cleaning, and hopefully this weekend we’ll get the furniture moved in and the alarm system set up, and we’ll be ready to put it on the market by early next week.

I’ll have final pictures in a few days…

We actually had an interesting experience today over at The Sunglasses House…a county code enforcement inspector (the same inspector we had for The Second Chance House, coincidentally) was apparently driving by the property and noticed the big 30-yard dumpster in the driveway that we were using for demo. He pulled into the driveway right as our GC was pulling up, and they had a chance to speak. The inspector wanted to verify that our GC was licensed and that we had all our permits for the rehab.

Of course, as I’ve explained before, we only hire licensed and insured contractors, and we pull permits whenever necessary, so this wasn’t a big deal. In this case, we were missing one permit, so my GC needs to head down to the permit office tomorrow or Monday; but, had we been stupid and tried to cut corners by using unlicensed contractors or by not pulling permits, today’s experience could easily have derailed the project and thrown us over-schedule and over budget.

So, for all you house flippers out there, consider this a reminder — always use licensed and insured contractors, and always pull permits when your municipality requires it.

I showed up a few minutes later and had a chance to chat with the inspector (which is good, as he’ll probably be the one doing the inspections on this house throughout the rehab). Before he left, the inspector asked if we had any other properties we were working on. I told him about The Mini House, and he apparently headed down there next to check that one out. That one is a basic paint and carpet renovation, so we didn’t pull any permits, and according our contractors down there, he stopped in, looked around for about 2 minutes and left.

When I got down to The Mini House a while later, I was quite pleased with the progress. The interior paint was completed, all exterior work was done, and the fixtures and vinyl flooring were set to go in. We expect the house to be pretty much complete tomorrow, with just a few detailed saved for next week. Specifically, next week we’ll be getting the carpets cleaned, putting in the appliances, and getting a new garage door.

We expect to have this one on the market next weekend. Time to go order the staging furniture and another alarm system, as the other two sets are currently being used…

Today, I want to give something away…here is a copy of one of the spreadsheets I use to analyze the profitability of a rehab/flip project (modified to remove a lot of the crap that’s specific to my projects).

It’s a pretty straight-forward spreadsheet, and anyone who has completed a couple flips probably has their own; but I remember when I was first starting out in this business, and I had no idea where to start. Just being able to see in one place all the costs, expenses, commissions, and fees associated with a typical rehab makes the whole analysis a lot less daunting. Not to mention, the rundown of typical labor and materials costs on the worksheet should help new investors get a handle on the list of rehab costs associated with a rehab project.

The spreadsheet is currently populated with an estimate from a recent flip, just to give an idea of how it’s used. Hopefully, you’ll find this useful…and if you do, please feel free to leave me a comment with your feedback…

I can’t take any credit for this one…my brother has been driving the project since day one, and other than stopping by once or twice these past two weeks, I haven’t even been there. But, I visited over the weekend, and it looks great.

The best part is that we may already have an offer. Our main contractor on this project has a good friend looking for a house. He and his wife stopped by on Friday, and they loved the place. They asked how much we wanted for it, we offered it to them at a great price, and they were thrilled. Now they just need to find out if they can qualify for a loan.

We have them scheduled to talk to one of our lenders on Monday, and the best-case scenario would be that they qualify for a conventional loan, so we don’t have to wait 90 days to close. Of course, if they only qualify for an FHA loan, I’d still be thrilled to get this one under contract so quickly. Worst case, they can’t qualify at all, in which case we’ll likely move the staging furniture in late this week and put it on the market in the next couple weeks.

I’ll post some pics later this week…