Second REI Property

[V.G Jason]

Investment Info:
San Antonio, TX off-market ~1900 sq ft house 3/2 house on a 3200 sq ft lot. Needs quite a bit of work, fortunately, nothing foundation or roof wise. Went in with my brother on this, he'll be doing all the rehab work, too. He's been in REI since the early 2000s and made a killing in the recession. Cost is split 50/50.

Sale Price: $146,000
Estimated Rehab: $100,000
Financing: Cash

We are going to split the main house into a duplex, and add a studio in the back. The studio will be about 440-460 sq ft. Roof & foundation are the only things okay with this house. It needs new windows, new floors, new countertops, new doors, hvac, water heater, pretty much everything as it could not be sold on the MLS. Our intention with the duplex is to make it 2br/1ba if that's not feasible it'll be 1br/1ba/1den. We believe we can rent each side of the duplex for $1300/mo and the efficiency for $750/mo with ease in the current environment. If we're able to make the duplex 2br,1ba we think we can get closer to $1600/mo.

When we checked with financing to see if our project made sense using the 1br/1ba/1 den version, they estimated the new resale value in the lower 300s. I think in today's environment that sounds about correct. This is going to be one of many long-term holds for my brother & I, we're very bullish on Texas property despite the horrendous taxes.  We hope this is going to be passed down to our kids. No intentions to ever re-fi this one, just hope the rehab budget stays on rate. I added 20% to our actual estimation cause you have to apparently. Permitting is going to be the other downside of this, as that may hold this project up but we believe we have the right contacts in San Antonio to work around this.

I'll update when done and see what we actually did.