Andover Rehab – Under Contract

I got my next rehab in Andover under contract a couple weeks ago. Conveniently, this one is right across the street from New Construction #14, Andover. My hope is to get both projects going at the same time, however, I ran into a pretty significant snag while pulling the permit for New Construction #14 several months ago. Evidently, the property is historic and I now have to go through the painful process of getting the town’s acceptance before tearing down the house and barn. While conducting my due diligence on the house, public records indicated that it was built in the early 1900’s, which is pretty common in the area and doesn’t signify a historic nature. Unfortunately for me, public record was incorrect and the house and barn were in fact built in the 1800’s and considered historic (said the town as they denied my permit!). This is a major fault on my end. I have a meeting with the town this week to determine if they will allow me to take down both the house and barn, or if they decide to delay. I’ll keep you updated on this.

Back to Rehab #15. I found this deal on the MLS and knew that, although the exterior is in great condition, the interior will need a good amount of work. This house was listed at $524,900 so I knew that I’d need to buy it much lower than that to yield a profit. My wife, who is a licensed agent, got me into the property to take a look.

This is an interesting house because while public records classify it as a 3,900 SF cape style house, it was actually being used as a ranch. I was surprised to see how much larger it seemed inside from how it appeared from the exterior. On the first floor, there are three bedrooms, 1 full bathroom, a kitchen and living/dining combo room. The basement is mostly finished and has a 3/4 bathroom, family room (with a huge bar) and laundry room. Unfortunately, the basement has a lot of mildew and the whole house is completely outdated and compartmentalized.

My plan for the redesign is to alter the floorplan so the kitchen and living room are open to one another and I’ll be removing the walls from one bedroom to convert it into a dining room. I will renovate the family room in the basement and keep the rest of the basement unfinished. The big value add to this house will be to drop in a set of stairs to the 2nd floor (it’s currently being used as an unfinished attic) and add two bedrooms, a full bathroom and laundry room. In order to do that though, I’ll need to dormer the back of the house for proper head height.

Knowing that this is going to be a pretty large rehab, I went back to run my numbers. Based on the desirable location, the features and size of the proposed house, I comp’d it out around $755,000 – $770,000. I’ll post the existing and proposed layouts once I’m finished with them. But looking at rough sketches, I’ll be taking this house from a 2,780 SF ranch to a 3,427 SF cape. Taking all this into account, I was able to get this property under contract for $445,000. And since I’m buying and selling through my wife, I’ll save a good amount on commissions. I also tried my hardest to get this Mustang thrown into the deal but the sellers weren’t interested in selling it:

Here’s the financial breakdown of the deal:

And the before pictures: