And We're Underway! - FLIP Series - SW Columbus, OH: Part 2

The intent of this series is to divulge the details of our projects so others may learn from our journey. Our aim is to be as detailed as possible, but please post your questions and we will promptly reply. Thanks for the read!

The Closing Nightmare

The 8 weeks since we went into contract on this home have been educational to say the least! We had to push the closing date back several weeks to buy time for the tenants' move out. This was a high-stress situation for the seller, the tenants, the wholesaler, our lender and us. There was no lack of drama, tears, screaming, curses and threats (not from us, of course). To get the deal done, we wound up paying half of the 2018 half-year taxes for which the seller was responsible. (A cool $800.)

In the meantime, our hard money lender ordered additional inspections, required a survey at the last minute, adjusted the budget a few times, randomly requested a "convincing paragraph" about our experience and otherwise dragged their feet on the transaction. It was a communication nightmare between us, our mortgage broker, the financier, the financier's 3rd party risk management firm and the contractor/inspector on the ground. I could literally talk directly the inspector and get an immediate status update, but for it to be official it had to travel back up and down the 5-level communication chain. They eventually required us to have the crawl space pumped of water and the foundation re-inspected (at our expense, of course). Thankfully, I have a fantastic and accommodating basement/crawlspace service provider who pumped it (TWICE!) for a reasonable price and was flexible in his busy schedule. Next time, we may opt for a lender to whom I can speak directly and who specializes in rehab and investment projects solely.

After all that, the inspections turned out fine and we finally closed the deal in the late evening of Thursday 12/20/18...timeline and budget already expanding.

Our total out of pocket cash expense pre-closing was:

Crawl Pump Out $250.00  Downspout Extensions  $49.41  Lender Fees (included line of credit set-up)  $1,740.00  Closing Costs*  $9,715.25  

Total = ~$11,755

*Closing Costs included all the normal title, lender, interest, insurance and tax fees, but also included an extra foundation inspection, survey and my portion (10%) of the sales price.

The lender held back about $44K for rehab costs. As we hit milestones (i.e. complete ⅓ of the project), we can submit for reimbursement. We don’t have to present receipts, but an inspector will ensure that the project is approximately as far along as we say it is. Each inspection is $135.

Now the Fun Begins

Our contractor started demo and clean out promptly the morning of 12/27. Clean out included 3 20-yard dumpsters of remaining personal property and garbage. Each dumpster cost $350 We've removed all carpet, the entire kitchen, bathrooms, doors, trim and baseboard. Here are some of the changes since demo.

Once the house was relatively clear, we took rough measurements of all the downstairs rooms to get a total square footage. We’ll use this square footage (plus 10%) to order new flooring (likely laminate). We also took a more accurate measurement of the kitchen so we can plan the layout, order cabinets, sink and appliances.

Immediate Next Steps

The house is cleaned out and demo is (mostly) complete. Here’s the list of next priorities as we see them:

1. Get the HVAC looked at. It hadn’t been working for awhile and we needed to find out why. It turns out that someone had been messing with the wiring and had fried several key components. Replacement parts and repairs total about $800.
2. Get the windows repaired. There are 3 with broken glass. Budgeted repair cost is $600, but we’ll see. My contractor is going to remove the sashes with broken glass and take them to a local hardware store to be fixed.
3. Buy and install 2 new exterior doors. The existing doors are in poor shape. In order to secure the property, we needed 2 brand new doors with knobs and deadbolts. Those are en route from Lowes delivery and cost about $650 in total.
4. Purchase and deliver 15-20 gallons of wall and ceiling paint. They are in the process of patching holes now. After the drywall is replaced and repaired, they can paint. This will greatly help with the smell and feel.
5. Purchase and deliver new bathtubs ($200 a piece), bathtub surrounds ($100 a piece), tub/shower fixtures ($65 a piece) and toilets ($150 a piece) for both bathrooms.
6. Go to Home Depot to have them design the kitchen layout with our measurements.
7. Choose and order flooring.
8. Have contractor measure for all trim and baseboards. Choose trim and baseboard style and order it.
9. Order and deliver 9 interior room doors, 4 sliding closet doors and 1 slab door for the closet under the stairs.
10. Wake up repeatedly in the middle of the night with ideas and/or panic about things I haven’t thought of yet and need to.

Items Pending and Weighing on our Minds

1. There is again a considerable amount of water in the crawl space. There is a sump pump in there, but as you may have guessed, it is inoperable. Our awesome basement guys says he can install a new sump pump for about $1000, but we’d like to wait and see how fixing the grading and downspouts will affect this issue. The septic-to-sewer contractor still has to do their work which we expect will change the grading and lot layout. Chances are that we’ll still need a new sump pump.
2. The well water system. If this system is in the same status as the rest of the mechanicals, it likely needs attention. We just noticed that the water line to the hot water tank has been severed and needs repaired. We’ll need a plumber and a well water expert to inspect and diagnose the system.
3. The unknown. We’ve yet to run any water, turn on the HVAC or use electricity other than existing light fixtures. Unknown issues with these systems could prove costly.
4. The timing of materials. We have to purchase and deliver all materials. It’s important that we do this in a timely manner so that our contractor has the materials he needs to keep working with little-to-no wait time.

There is certainly a lot to be done and even more to think about. We keep moving forward and leveraging experienced people including our contractor.

Some promising news: This home is across the street and just went on the market for $125K. It has fewer baths, fewer beds and fewer square feet.  

More to follow...