Bit off more than we could chew...

[Donald Campbell]

Not looking for a pity party here, just some tips for newer investors that might save some pain for others.  I'm not giving up on real estate investing and this is a learning experience so not a total waste. 

This was a sweet little house-hack, our first investment property a duplex in S. Florida. I really love the area, the house is pretty old 1925 and in a historic area.... are your shoulders tensing up yet?  :)  It would've been $200 a month out of pocket to live walking distance from the beach, but our 203k renovation loan failed as we could not get the project approvals required from the city. 

Long story short, historic areas can be really challenging to do a project in, specific windows required which may be back ordered for months, specific roofing and siding required, additionally due to current craziness in the housing market you may not be able to get an architect and engineers report which may be required for approval. 

This particular area (Lake Worth) suffers from a shortage of the architects and engineers.  Or rather, they prioritize the work in West Palm Beach over lower price-point cities nearby.  It seems the same amount of work earns less if the property is worth less, so they'd rather work where they money is.  I get that.  Either way they're backed up many months in advance.  Let's say you do get one and guess what, they get COVID (this happened).  Then finally months later they show up and..... decide not to do the job.  Not much you can do.  After 8 months of constant struggle and effort we finally hit a line in the sand and decided it's time to sell. 

So part of it was COVID, part was supply-chain back-orders, part of it was housing demand market craziness, part was being in a historic area. For example with a historic house here you can't replace part of the siding and leave the rest, the whole thing has to be consistent. If you have an older design of siding you may not be able to match it anymore, requiring the whole thing be redone. Your 203k loan will also be subject the home to HUD standards which will include many items you may not have planned on. If you repair past a certain amount you may have to bring the place entirely up to current code. Project scope can grow very quickly.

Yet still with rents as high as they are, even with extensive repairs it's still a great deal overall. With all the challenges involved however we're selling it cash only since an FHA buyer is going to run into the exact same issues we did and we don't want closing to take months. Someone with a team in place can just hop in and get it done. Yes we could still do something crazy like get a hard money lender and move ahead without FHA/HUD requirements but we've had enough.

Try not to bite off more than you can chew.  :)