House #3: Some Details

August 20, 2008 · 3 comments

The Second Chance House finished its due diligence period yesterday, so it’s officially too late to back out of this one. While I wasn’t able to get my Scope of Work completed for this one just yet — and therefore wasn’t able to get contractor bids, the price was low enough that I’m confident we can do a full rehab and still have room left over for profit. That said, there is a lot of work that needs to be done on this house, and I’m concerned that my plans are going to be a bit more extravagant than is necessary for this one.

I’ve been so busy with houses #1 and #2 that I haven’t spent as much time thinking about this one, but spent the day there today getting my inspection complete and starting my Scope of Work document. I also haven’t written much about this one, so here are some more details:

  • First, of course, are some pictures
  • This house is another bank-owned foreclosure that I was able to pick up very cheaply. It needs a lot of work, but I’m confident that I’ll be able to make a profit on this one, and am planning to probably put a bit more work in than necessary to hopefully ensure that I can sell it in this market. I may have to spend an extra $5-10K on this one to ensure it sells quickly in it’s price-range, but I think the trade-off is worth it.
  • As I mention above, my goal on this one will be to sell. As I’m going to have to basically gut the kitchen and baths, put down all new flooring (there is no flooring there now), and move around some walls, I’d rather just sell it in its new pristine condition as opposed to giving a renter the opportunity to destroy it again.
  • I had my inspection today, and there were no major surprises. I was happy to find out that most of the major systems worked just fine, with the exception of the hot water heater. The roof was in good shape (other than the gutters), and there were no major electrical or plumbing issues. There is some evidence of termites, so that’s one expenses I didn’t count on, but hopefully there’s no major damage and any existing damage can be easily remediated.
  • It was also very nice to find out that the house is built with a truss roof, meaning that none of the interior walls are load-bearing. This is great, as my biggest concern with this house is the fact that many of the shared rooms (living room, kitchen, dining room, entryway, bonus room) are very compartmentalized. I’d love to be able to open up the floor plan, and now I know I can. In fact, I can add and remove any walls I want, giving me essentially carte blanche on the layout redesign. Of course, this is where I’m concerned that I’ll probably go crazy and over redesign, but it should be fun.
  • I also need to decide how I’m going to handle the contractors on this one. While I was considering bringing in a bunch of subs on my own (electrician, landscaper, roofer, painter, GC, etc), I found another company that will provide all the contractors at a very reasonable price (the guy that owns it is a friend of a friend). So, I’m going to let him bid the job, and if he comes back at a reasonable price, I’ll suck up the few extra dollars I might save by GC’ing it myself and just go with them.
  • I hope to close on this one in the next week or two, so it’s time to get moving on some bids for the work…

3 responses to “House #3: Some Details”

  1. El Guapo says:

    You said garage conversion is a bonus room, but it has a closet so it is a legit bedroom right?

  2. J Scott says:

    Yes, good point. I was thinking of tearing out the closet to convert it to a media room, but my wife set me straight and reminded me of the same thing you just did. We are going to throw a door onto that room (it’s currently connected to the Living Room via an archway) and leave the closet, so it will definitely be usable as a 4th bedroom.

  3. AJ M. says:

    J Scott-
    Just wanted to say to keep up the blog. I’m a new investor and your blog has been great. I’m interested in your ‘Lots to Do’ post as I’d like to know more about what your experience with the business credit and hard money loans. I’ll be keeping track…

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