Duplex under contract

[Paul L]

I've got my first deal underway. Monthly rent $1600 total for both units. ARV 130K. Picked it up for 62k, and it needs ~20K of rehab. We close in 1 month. I'm intending to do the interior painting myself so that should save 3-4K on the rehab. My intention is to use conventional finance on this deal with 20% down, then refi as soon as possible and repeat the process. I've spoken to two brokers who indicate they can arrange cash out refis in 90 and 180 days. My problem with this is the closing costs, which are estimated at $4600 including escrow. Doing that twice in 3 months is a serious overhead. Any ideas on a more efficient way to do this?

[Ty Hines]

Hi Paul,
I wont comment on the closing cost issue but I do have somethiing to say about the rehab cost. I am not a licensed contractor but I have extensive experiance with rehabs.Through my experiance I have found that most investors overpay for rehab. You mentioned that you could paint yourself and save $3-4k. There is no way you should think that interior painting should cost this much whoever told you this ask them to explain why.Concerning other aspects of your rehab a good idea would be to look on sites such as craigslist, kudzu and others to look for qualified contractors you will find that most of these guys are just as good or better than the big boys but dont have the funds to advertise in the yellow pages. Also ask family, friends and colleagues to refer someone they have used.You might also consider getting a home inspector to look at the property with the lack of business you could find one to do an inspection at a reduced price.The purpose of this is to have a clear picture of what needs to be taken care of and not just what your general contractor says. Another good suggestion would be to tell all contractors that you will be paying for all supplies and you just need a labor estimate. The reason for this is that many contractors try to hide elevated labor cost in their estimates along with supplies. This technique forces the contractor to justify why their labor prices are what they are. True, you can not tell certain skilled pros what they should charge but you can tell them you are not willing to pay their price. I hope these small suggestions help you save some money on your rehab.

Good luck!!!!