99 Days Without Food or Water for $74,000

[John Suralik]

How long would you cook on a Coleman camp stove to earn $74,000 in equity?

I found my number. It is 99 days.

Now, for a little background on the deal.

We closed on a third house, a HUD REO, on June 30, 2015. The purchase price was 90K and we were approved for a HUD FHA 203k loan.

The conservative ARV is 195k and we will have 125k in the house after all repairs. It was one of the HUD auctions that is only open to future occupants before it is open to investors. We knocked down walls and created an open floor plan, removed the popcorn ceilings, replaced dated wood paneling with sheet rock, and installed hardwood flooring throughout the home in the first 45 days of construction. My wife and I decided that we were masters of the renovation universe. Life was good.

The kitchen hit us like the morning after a good wedding party that moves downtown when the reception if over. I knew the headache was coming; I saw the mold on the wall. The corroded plumbing haunted my dreams, but we couldn’t tackle the kitchen first because renovations to the kitchen was not listed on the 403b repairs list. In order to draw from the 403b escrow account and pay the contractor for the portion of the repairs that he completed, all of the repairs on their list must be completed and NO OTHER MAJOR PROJECTS ON THE HOME CAN BE IN PROGRESS DURING INSPECTION. This rule caused us to do the renovation out of order and we moved in after the hud inspection, completed the kitchen renovation, and cooked on a camp stove for exactly 99 days. 

This home is in a very desirable neighborhood, ten minutes from the beach, has low exterior maintenance, but the best part is it will cash flow $250 a month when we move out in a year. Thank you BP for all of your experience and encouragement.