Don’t make assumptions

[Peter Youn]

Hi bp, 

If it’s alright, I’d like to keep a construction diary here. 

I am a real newbie to the field, with only 2 properties to my name. My first property went well, especially for something I bought without doing any number crunching and studying in this field. My second, however...

I would like to think that I’m a “learn while having a fire under my butt” kind of learner, so I bought a real fix-me-up.

3bed 1.5bath 918sqft

Selling price: 20000

Expenses estimate to fix: 25000 (rounded up) (Correction later)

Arv: 75000 (rounded down)

Taxes: 400 (yes, just 400 at the time; this is estimated to increase to 700-800 at time of complete renovation)

Utilities: 40 a month

Estimated rent at the time: 850 (lowest estimate)

I had no intention of selling at the time; I wanted to rent the property out.

The main reason I bought a house that needed a ton of work was because I wanted to know how to do all the construction myself, so once I move to the next property, I would know what a contractor is looking out for and be able to find the cheapest price I can ask from a contractor without gutting them of their profits. Also, to see if the work is as difficult as it is perceived. 

Everything seems to swimmingly: siding is up, fascia and soffits are in place, heating was setup, insulation was installed. One thing that I did not notice when I was purchasing this property was if this house had city sewer or not. I just assumed because I was in the outskirts of the downtown, and my neighbors all around me had city sewer, that I too had city sewer.

There is no sewer.

Come yesterday, I found that not only did I not have a city sewer, I don’t even have a septic tank; the drain goes straight into the dirt.

Estimated cost to attach the house to the main sewer is 30k, the actual livable sqfootage is closer to 705 (2nd floor height is 6ft) and this house is actually a 2 bed home. That drops the arv to something closer to 65000ish, (possibly lower), and the rents to about 650 (lowest active atm). 

So what am I going to do? Honestly, I’m not sure; this post could be just be me venting. 

But what can you take away from it? I’m not sure either. If you got questions on how to avoid what I did here, I’d say for me, I’m going to never make assumptions, and make sure to check the drains first before buying my next property, whenever that happens again.