House #25: The Drought House

July 20, 2011 · 0 comments

After a long drought of not being able to put any houses under contract to purchase — nearly three months — we finally got a contract on another house…

This will be our first HUD property, and we’re pretty much flying by the seat of our pants to figure out the process for getting all the HUD contracts signed and getting the property to the closing table. The listing agent hasn’t been very helpful, nor has the asset manager or anyone else at HUD who we’ve spoken with. While we received notification online that HUD has accepted our bid (two days ago), they still haven’t sent us the contract or told us what the next steps are…

Anyway, more about the property:

It’s a relatively new house — built in 2000 — and needs extensive cosmetic work. Basically, the demo will involve pulling out nearly every finish material in the house, including cabinets, flooring, light fixtures, plumbing fixtures, etc. Because it’s a relatively new house, I don’t expect any issues with the mechanicals, the roof, the siding or anything else overly expensive or complex. It’s a larger house (about 2000 square feet), 3 bedroom, 2.5 bathroom, with a large, open floorplan.

We’ve actually rehabbed two properties in this neighborhood already, for another investor. So, we know the house design pretty well, and we know the neighborhood. My big concern for this project — and a prediction I’m going to make right up front — is that I think we’ll get offers on the property well above what it will appraise for. So, we need to be extra careful to ensure that we don’t over-rehab, as our upper sale-price limit is already set, regardless of how nice the house turns out.

I’m going to go so far as to predict that we may not even make the minimum profit we expect on our houses, but given that this will be an easy project, we’re not too busy doing other work right now and we have the cash sitting around, I’m okay settling for less just to keep our contractors and my project manager busy.

I’ll post some pictures later in the week…

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