We closed on the purchase of The Hat Trick House today…
It’s been a long day, so I won’t go into too much detail, but I wanted to lay out the basic rehab plan, schedule, and budget for this project. Here’s a nice bulleted list of the important points for this rehab:
– My brother — who has been doing a lot of the day-to-day project management on all our projects — has volunteered to run this project from beginning to end, including budgeting, hiring contractors, negotiating, scheduling, etc. I’m confident he’ll do a great job, and I consider this setting the stage for when I’m spending a greater percentage of my time focused on other aspects of the business;
– The financial breakdown of this projects is as follows:
- Purchase Price: $45,000
- Rehab Budget: $15,000
- Fixed Costs: $13,000
That puts our all-in costs at about $73,000, including all closing costs on both ends, agent commissions, holding costs, concessions, etc.
At very minimum, we hope to sell the property at $90,000, which would put our profit at $17,000. If you include the commission that my wife made on the purchase of the property ($2500), we should make a minimum of $20,000 in profit on this one. We currently have the one down the street — The Red Garage House — under contract for $109,000 (they’re very similar properties with very similar rehabs), so it’s not unreasonable to assume that we may be able to sell this one for more than $90K and make more than $20K in profit.
– Our schedule on this project is 4 weeks. We could likely get it done in half that time if we really wanted to, but considering our end-buyer will likely be FHA, even if we finish in 4 weeks, we’ll have another 8 weeks before we can sell it.