A Running Blog...A flip during COVID

[Andrew J.]

Greetings, I have been a long time member of BP, posting here and there and listening to the podcast regularly. 

As I am sure many have who are active on these forums, I purchase a distressed property in on Feb 28 located in Cudahy WI.  As an educator who is adapting to "remote learning" I am also trying to connect with more folks digitally, because a single guy with a dog living in an upper duplex currently while I understand the importance, shelter in place sucks.

Here are some details on the deal:

The former owner was a hoarder and had let the home fall into rather rough shape.  The saving grace of this home, all the natural woodwork was kept in remarkable condition AND since the home is in the flight path of the airport, 5 years ago Mitchell International came in and replaced all the windows, exterior doors, installed 2 new furnaces, 2 new central air units, basement dehumidifiers, and water heaters.  Had that not happened the home would not be worth it.  While the home was purchase as an investment on a 12 month interest only loan, I will be refinancing to owner occupied.

Here are some details:

Purchase Price $137,000 including the adjacent vacant lot

Construction Budget:  $33,500 included in the loan (real costs are more like $50,000) lesson #1 - Increase knowledge on renovation costs.

ARV: $196000

Rents:  $1600/month conservatively

Again the plan is to refinance, move into the lower, and rent out the upper.  We are about 1/2 way through the renovation and while this is the 3rd home I have purchased for renovation I am always learning more...and more...and more:

#1 - I recently moved back from Colorado and had lost many connections of contractors that I had before I left.  I was reminded quickly, HIRE GOOD CONTRACTORS.  The first guy I hired was a clown, stole from me, and cost me both time and money.

#2 - Costs always seem to be more than budgeted for, even when budgeted for on the high side.

#3 - Don't buy on emotion, while the numbers are still good on this property from both ARV, rents, and appreciation this house was hands down bought from 2/3 emotion and 1/3 business. Could have, would have, should have. If I would have purchased a nice turnkey duplex in January, I would likely be moved in, have a tenant paying 1/2 my mortgage, and more cash on hand to invest during this pandemic. All that said I am very fortunate at this point to still have equity in an appreciating asset AND a full-time job.

If you are reading this be well, stay safe, and please provide any feedback or questions you may have.  This was my first experience with a  National HM Lender.  While the experience has generally been positive, good lord did that loan get costly quick.