Almost done with first major reno - looking for feedback

[Laura Levine]

Good morning,

As I sit here buying yet more construction supplies for the last finishes for our first major renovation, I'm feeling pretty overwhelmed with how the numbers are adding up. So I thought I would post about our experience in the hopes of getting some reassurance that I'm not too far in over my head, or in getting some feedback for our next move in REI. So here are our details:

90 year old, 2 family home approximately 2200sf. Bought as an unofficial estate sale, hadn't been updated in probably 30-40 years. Paid 315k, it appraised at 335k. We bought with 5% down with a 5/1 ARM at 3.25%. We plan to live downstairs for 3-5 years and rent out the top floor. Rental estimates are approximately 1600-1700/m for upstairs.

Construction estimates initially came in around 50k for a pretty much complete remodel.  As soon as we opened the walls we came into more fun "surprises" and ended up redoing 75% of our electrical and 65% of our plumbing and totally redoing the floor plan on the main floor, for a total of 12k in unexpected costs (obviously sprinting past our 10% contingency).  We are just about 1-2 weeks away from completion now and we are a month behind and now our approximately construction costs are closer to 80k.  We have used mostly interest free loans from our parents (20k), a 25k personal bank loan at 6.5% for 60m, our own cash (25k), and now we are looking at putting the rest on credit cards with cash advances (0% interest for 15m).   

Our current carrying costs are about 2485/m with PMI. Once we are done with the construction and have 3 months of rental income we plan to refinance into a more traditional 30yr mortgage which should lower our costs by about 200-300/m. Our real estate agent indicated that she thinks our house will be worth at least 400k when we are done.

How do you think we did?  Worthwhile investment or money pit?