2nd Baltimore house under contract, 1121 Sherwood Ave.

[Vina Real]

Hi,

My offer on this short sale property got accepted by the bank 3 days ago. Got the inspection and house is in good condition in general. I'm under 10 day- due diligence period. I met 2 contractors so far and they're $15k off from each other. My numbers and SOW is as follows:

1. Replace old kitchen with new cabinets and granite countertops. 

2. Replace kitchen appliances 

3. Change existing backsplash and kitchen flooring. 

4. Refinish hardwood floors on first and second level. 

5. Replace quarter round all throughout the house. . 

6. Replace old boiler system with new HVAC unit and put new ductwork. 

7. Put exhaust fan on 2nd floor bathroom. 

8. Recaulk bathtub 

9. New toilet, vanity mirror and sink on second floor  bathroom. 

10. Replace door knobs and electrical outlets all throughout the house.

11. New paint interior of the house 

12. Put new recessed lighting in the living room. 

13. Replace carpet with LVP flooring in the basement. 

14. Place drywall in the basement after painting with waterproof paint on the walls. 

15. Redo basement full bath 

16. Replace water heater 

17. Change 100 amp electrical panel to 200 amp. 

18. Remove bushes and couple trees around d the exterior of the house. 

19. Repair porch and repaint porch shade. 

20. Remove rotten shed. 

21. Replace plastic covers on windows.

PP- 99000 conventional financing, 20% DP 19800
Closing Costs- 5000
Rehab Cost 35,000-40000
Rent- 1500 x 12= 18000
Property Taxes- 2912
Loan- 79200 @ 5.625% (PITI 773.59×12= 9283.08)
ARV- 150,000-160,000
Insurance- 900
Repairs- @ 8% 1440
Capex- @ 8% 1440
Vacancy- @ 8% 1440
1440×3= 4320
PM- @10% 1500
4320+1500=5820
9283.08+5820= 15103.08
18000- 15103.08= 2896.92
2896.92÷12= 241.41( monthly cashflow)

With all these repairs, is $50k a reasonable quote? What about $13500 for the whole HVAC system w/ ductwork? And also I think I overpaid on this 2nd rental although I have positive cashflow. What do you think of the numbers? Calling all Baltimore rehabbers here for feedback before my due diligence period ends. Thanks!

[Vina Real]

@TyroneHansboro The contractor I picked quoted me 35k initially but total was 40,200 + appliances 2800. I learned a lot of lessons from this rehab:

1. Build a strong scope of work. I should've made an itemized pricing of repairs instead of as a whole package. I noticed the contractor tried to add things to be done in addition to the original SOW.

2. Visit the site when they least expect it. I should've but I didn't because of my work. I always went there on the weekends so I didn't know how the contractor and the team worked. In the end it resulted to a warning from the citt because of the trash pile in the backyard. Bad management from my part.

3. One blooper that the contractor did was expanding the basement bathroom shower without checking if there was a real drainage outlet. We had to redo it and cost us 1500 worth of repairs.

The rehab was a month late and also missed the mark for summer rent. The good thing that happened was I found my handyman thru this contractor. They say that sometimes people come to our lives for one reason and to me that was this handyman. I also found my reliable realtor thru a person that I had a bad experience with lending. I have more lessons to tell but this is getting longer. I hope this post helped you a bit.