Delaware Flip to Rental

[Glen Beringer]

Hi all,

Just wanted to post some of the before and after pictures of a flip to rental property we completed over the last year in Delaware.  It's been complete since Dec 2015 but just finally getting around to posting here on BP.  We bought the property for 110K w/ 25% down.  (25% was required by the lender).  Including holding costs (which includes loan pay down) and all renovations, we are all in around 150K.  We ended up having to do a lot more work than expected (including a new roof, water heater, pulling out ceilings, etc) and also did some work that wasn't "needed" like insulating and replacing the ceilings of the top floor.  Property is a 3 bed 1 bath with a weird extra toilet in the basement.  We tried to keep as much original as possible since the house was over 100 years old, but decided to just gut the Kitchen and Bathroom since they were awful.  We did 95% of the work ourselves but only had weekends to work on it since I travel for work.  It took us just about a year from start to finish.

Our mortgage tax and insurance is 633 per mo.  Rented it for 1300 per mo (which is actually about $100 less than I should have asked for. (but I will be sure to increase the rents with the next tenants)   We had 20 applicants within 7 days of posting the property.  It is probably not the best deal to be had based on the amount of cash out of pocket, but for a first investment property, I would call it a success.  If nothing else, I learned how to do just about everything as far as renovations go, and now can walk in to any property in the area and have a general idea of what I am getting myself in to and the costs of the rehab.

A few takeaways from this project:

1.  Don't try to do it all yourself.  (unless you have to)  If you have the money, pay a contractor to supplement the work you are doing on the weekends.  We could have finished this place in 3-4 months, and saved about 10K in holding costs and lost rents by having someone else working during the week.  We could have used the 10K on the kitchen and wallpaper removal and not have wasted an entire year's worth of my weekends.  I caveat the "unless you have to" because I was also working on, and paying for, renovations in the house I lived in and didn't have the cash at the time to float two mortgages, install two kitchens, two bathrooms, etc.  

2.  Wallpaper is an awful, awful, invention.  This place was owned by a little old Italian lady, who wallpapered every surface, with multiple layers of wallpaper.  Every wall and ceiling in the house was papered.  This alone set us back about 6 weeks worth of weekends just getting rid of this, only to find out that the plaster was in horrible shape behind it.  

3.  Don't buy RTA cabinets.  The Lowes or Home Depot cabinets that come pre-built are better quality and don't cost that much more.  We used the Lowes cabinets on the other house and they are great.  (not the cheap MDF ones, but the ones that are made from solid plywood boxes and soft close drawers).

4.  It all is worth it in the end.  This house is pretty much brand new inside.  We now get a check every month and will have this house paid down in just about 7 years.  

Pictures:  Sorry the pictures aren't great quality- They were snapped quickly from my phone before we did the final cleaning for showing the property.

Kitchen: Before

Kitchen: After (pictures are from before the hardware was installed)

Living Room Dining Room: Before

Living Room/Dining Room: After

Bathroom: Before

Bathroom: After

Hall: Before

Hall After:

Let me know if anyone wants to see additional pictures or pictures throughout the rehab.  I have pictures of the wall repairs we did on the plaster, cabinet builds, etc.  It's really amazing that the walls came out so smooth after the shape they were in.

All the best,

Glen