New Rehab Project

Well, we’ve started a new rehab project and thought it might be useful for some of our members to read about it.

The plan is to go day by day, as long as something gets done, and update you on the progress.  We want to tell you how we did it, why we did it and what we plan to do with it.  In the end we’ll see how it all works out and hopefully someone will learn a thing or two.

The house in question is a small house in a really great neighborhood in Marrero.  It’s a two bedroom house and we don’t normally do two bedroom houses but this one should make us a little money and we were bored looking for a project anyway.  Our realtor seems to think it will sell fairly quickly being that it’s in a great neighborhood so….away we go on a rehab of a two bedroom house. 

Here are the particulars:

After Repair Value (according to our realtor): $125,000 – $135,000 We’ll call it $130,000

Repairs: $24,000 (flooring, cabinets, move a wall, take down paneling and put up sheetrock)

Take ownership of the property “Subject To” the mortgage in place. Existing mortgage: $55,000.

Also had to pay the homeowner and catch up his overdue mortgage payments: $13,750.

So it should break down like this:  $130k sales price minus 6% for the realtors= $122,200

Subtract out the $55,000 mortgage and we’re left with: $67,200.

Subtract out the $33,000 we owe our investor, $30k loan at 10% interest and we have: $34,200.

Subtract out the $12,000 we’re going to have to spend for overages, mortgage payments, utilities, etc and we’re left with: $22,200. 

So we’re putting in about $12,000 of our own money to make $22,200 and we aren’t doing any of the work.  That’s an 85% return on our investment. 

So the investment doesn’t fit our normal formula, and the money is a little tight on this one but…I’m not going to be upset about an 85% return on my money.  If we had other projects going on now I probably wouldn’t have messed with this one but we were bored and looking for a project.  Not only that but we get to keep one of our investors engaged in the process, and he’s going to make his 10% so everybody’s happy.  

Now we just have to get it done and sell it.  Stay tuned.