I’m looking at a 4/5 plex. have the money to get into it. I’d go to a PML for the rehab. I’ve gotten 2 quotes from GC’s. It’s a complete gut and remodel. Need: foundation work, new roof, hvac, water, electric, structure work. I want to live in it and work on it along side GC. I have construction experience. Am I over my head? Am I crazy? Haha. Im 30 and single. Good work ethic. Good attitude.
I echo Joe Villeneuve's reply. I don't know if you should do this or not, but not knowing the numbers is very careless with your hard earned cash. Become great with estimates, in detail. You can end up loosing alot of money if you're not careful, in fact, it's almost a given. Crunch the numbers properly then decide. If they are good, go for it!
To be fair, I assume he did run the numbers...he just didn't list them, and that is more important info needed to answer his question than what he did give us.
As long as your acquisition price was low enough and you have the rehab money you will have exit options or continue on with your plan to repair and rent.
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
5y
Yes...and I haven't even seen it yet. I say this for many reasons, but the first one that comes to mind is this. You make no mention of the most important things...the numbers with $$$ in front:
A - Cost to buy B - Cost of rehab C - ARV in the immediate area D - Cost of financing E - Carrying cost while you rehab F - Cost of lost wages while you are working on this project
Then, you say you want to hold the property and live in it...while under construction (haha...sorry):
A - Direct Cost overruns because you are living in the construction zone (yes...that's a real cost...and a big one) B - Indirect Cost overruns (see list above) because you are living in the construction zone C - Eventual Cash Flow when (if) you end up getting the other units rented out D - Cost of a Property Manager (I figure you think you're going to be it,...and save money because of it....wrong). Always calculate this into every rental unit. E - Monthly expenses, such as insurance, taxes, etc...
Investor · Naples, ME · Member since 2019 · 54 posts · 40 votes
5y
I echo Joe Villeneuve's reply. I don't know if you should do this or not, but not knowing the numbers is very careless with your hard earned cash. Become great with estimates, in detail. You can end up loosing alot of money if you're not careful, in fact, it's almost a given. Crunch the numbers properly then decide. If they are good, go for it!
I echo Joe Villeneuve's reply. I don't know if you should do this or not, but not knowing the numbers is very careless with your hard earned cash. Become great with estimates, in detail. You can end up loosing alot of money if you're not careful, in fact, it's almost a given. Crunch the numbers properly then decide. If they are good, go for it!
To be fair, I assume he did run the numbers...he just didn't list them, and that is more important info needed to answer his question than what he did give us.
I also assumed you ran your numbers . Listen to what they tell you and make sure you are as accurate as possible with estimates, carrying costs and rehab prices, etc. numbers do not lie.
@Joe Villeneuve ARV I estimated it be 220k On the conservative side and I'm going to have another realtor get an ARV. 35k for the 4plex 20% down (4,000) owner financing, 105k in repairs and labor as quoted pre 1 contractor. Im still waiting for the other quote from another contractor. Rented 2 years ago for $1600 total for 3 units. $1200 in taxes for a year.
When I ran the numbers I used it according to the numbers above.
I would shoot for a third quote on a rehab of that amount, are you breaking down the quotes by trades or just hiring a GC to take it from start to finish ? It may be advantageous for you to hire the individual contractors for each specialty, (plumber, electrician, framer, sheetrock) etc. Did you factor in overruns on the budget? Also your soft costs like permits and insurance, utilities, taxes?
What will the rents be after the home is complete?
If I may ask, in what city where were you able to find a 4 family for 35k?
@Gary Mazzarella I was thinking a GC for start to finish. And I used the $1600 for rent. Which is from 2 years ago and only renting out 3 units. I’ll have to check on the going rental rates now.