House #11: Some Details

May 25, 2009 · 9 comments

We now officially have The Sunglasses House under contract, and I wanted to share some details (including pictures) of the property.

Here’s the quick rundown:

  • Purchase Price: $33,000
  • Year Built: 1991
  • House Type: Split Level, 3/2 with Basement Room, 2-Car Garage
  • Rehab Scope: This is likely to be our biggest rehab to date. Pretty much every interior and exterior surface must be repaired/replaced. A couple notable things about the rehab: All plumbing must be replaced; all mechanical systems need to be replaced; we need a new roof, new gutters, and major repair to the exterior wood, siding, trim, soffits, and fascia board; we need an all new kitchen; the laundry room must be ripped down to the studs to remediate the mold; the master bath needs a new design/layout; the fireplace needs a total reconstruction; the front and back decks need major repair; and it’s going to take a lot of drywall and paint to cover up the interior damage.
  • Rehab Costs: Likely to be between $47-55K
  • Pictures: Here You Go! These are the inspection pictures, so they’re not great, but should give you an idea of what we’re up against on this one.

We spent a couple days last week doing inspections, putting together the Scope of Work, getting contractors to the house, etc. We hope to have all the bids back by the end of this week, and hopefully we’ll be able to hit our budget of $50K. That said, the original estimate I came up with was $58K, so we need to do a little negotiating and may have to cut some things out of the project.

I’ll have more to say about this project after we have our bids and are certain what we will (and won’t) be doing.

9 responses to “House #11: Some Details”

  1. Wow, this house actually doesn’t look too bad from the pictures, from the outside it looks like a real nice house. I think you got a good deal at $33k…. I’d love to take on a project like that. Are you gonna use a GC on this one or try to handle the subs yourself?

  2. Ingrid says:

    Wow, sounds like a good one. I’m looking forward to your progress.

    If you don’t mind me asking how long was this on the market? It looks similar in size and scope of work of a local REO I’ve been watching, and that’s been on the market since Feb, with no apparent takers. Makes me wonder where the local rehab investors are in this county.

  3. J Scott says:

    Matt –

    Our general philosophy these days is that we only use a GC if we need permits pulled (in Atlanta, only a GC can pull permits on a non-owner-occupied house). For this one, the plumbers will pull permits for the repiping of the house, and the HVAC contractor will pull permits for the HVAC work, but other than that, we won’t need to pull any permits. So, no GC on this one.

    We have one full-time employee who is responsible for all the contractor hiring and project management, and he’s fantastic. So, we save the money on the GC if we don’t need anything permitted.

    As for the house, it’s got a lot of issues (especially exterior wood rot and interior cosmetics), but from a structural standpoint, it’s in good shape. We picked it up for $33K, will put $50K into it, and our holding costs and fees will run about $17K, so we’ll be all-in for about $100K. So, if we sell it for about $120-130K, we’ll make about $20-30K on this one. It’s possible we’ll sell it for more, depending on where the market heads this summer.

  4. J Scott says:

    Ingrid –

    This property went on the market at the beginning of March (about two months ago), and was originally listed at $54K. We looked at it the first week it was on the market and put in an offer for $35K that was rejected.

    A month later it dropped to $47,500 and then a couple weeks after that it dropped to $39,900. We then resubmitted at $31K and negotiated to $33K.

    I imagine most investors wouldn’t want to take on a job this big for $20-30K in profit, but we have a great set of contractors, so even though this will likely be our biggest project yet, it shouldn’t be too much more difficult than any of the past projects. We just need to ensure the costs don’t spin out of control.

  5. Rowen says:

    Just wondering what ended up happening to the 16 Bid House. Have you closed on it yet?

  6. J Scott says:

    Hey Rowen –

    Good question…I forgot I haven’t provided an update on this one for a while…

    According to the title company, there is a lien against the title that has been very difficult to clear (don’t know if the lien-holder has gone out of business or what). Anyway, we just got our fourth extension on this one, and now we’re hoping to close by June 15.

    It’s already been nearly 12 weeks since the original contract was completed, and to be honest, I don’t know if this one will ever close or not. Hopefully it will, as I’d hate to have to go back and update my blog posts with new house numbers for #9, #10, and #11…


  7. Ellie says:

    Heard you guy like to use illegal aliens for your workers. Is that true.

  8. chris says:

    great new website and a great deal also this is your first big rehab with 50k in your others houses needed less work 15k has your target changed to big rehabs at lower prices or less work picked up at 45k and above. i am moving to altanta this summer and want to target light rehabs like yours quick in and out but i live in them where i work 2-3 a year. you are doing a great job over the past year you created a system and have done very well. how is the altanta market ? and what do you see down the line for flippers? thanks

  9. J Scott says:

    Ellie –

    That’s absolutely not true!

    All of our contractors are legal, licensed and insured. They all provide W9s (IRS tax forms), proof of general liability and workman’s comp insurance.

    On top of that, I highly recommend to all investors that they have the same requirements for their contractors, both to protect themselves, their buyers, and their crew.

    Take a look at this article in our Education section for information on the requirements we have for our contractors.

    Thank you for bringing this topic up…it’s one that I haven’t addressed enough in my blog, though I really should more often!

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