Massive Mistake That Could Have Killed My Deal..

[Moises R Cosme]

356 Chestnut St. Gardner, MA

1. $60,000 acquisition price
2. $125,000 renovation budget
3. $340,000 estimated after renovation value
4. This is a property we are holding; we expect a monthly mortgage payment of $2,100 versus monthly rents of $3,000

How we sourced it: cold calling non owner occupiers

Renovation issues:

1. Building department initially rejected our permit application because it was filled out incorrectly
2. Building department rejected our permit application a second time because it was filled out incorrectly
3. Building department scheduled a physical inspection and determined that we had structural damage and needed to obtain plans from an architect in order to proceed with the project

Solution: we hired an architect and completed the plans.

Lesson learned: do a better job submitting permit applications, we believe we could have avoided the physical inspection had the permit application been submitted correctly the first time around.  This was a MASSIVE mistake and it could have really cost us, we have been waiting for a final permit for close to two months and the architect added thousands of dollars to our budget.  In the end we are lucky that the folks at the building department know us and know our work, otherwise, I think this mistake may have killed our deal. 

Neat things we plan to do: cost segregation analysis to take advantage of accelerated depreciation. Save 100% of the rental income to fund college education for our kids; the cash out refinance should allow us to pull all of the cash out that we put in, the rental income is not essential for our day to day. The plan is to save all of the rental income and use the cash we pull out from the cash out refinance to buy the next multi family rental project.