Now We Have a Signed Contract!

After another offshore call with pauses and fading sound, the owner understood his mistake and resigned and initialed the contract and emailed me back all the pages. I doubled checked everything and then forwarded the contract to the title company along with a detailed email regarding my situation offshore. I woke up today with a confirmation email from them and a request for a copy of the power of attorney so they could look it over. When my wife and I were trying to buy our first house together the underwriter requested a different POA than the one we had, so we have two. I sent over copies of both.

Before I went to bed this morning (I'm on nights), I spoke to the home inspector and the electric company. Electricity is set to be turned on tomorrow and the inspection is scheduled for Thursday morning. I don't have time to turn on the gas and the water so I'll have to cross my fingers that there's nothing wrong with those. Everything that I can do is done so now it's just wait. 

Now that I have the house under contract, I'll give you the specifics.

2 bed 1 bath
Built in 1955
1250 sq ft
Price: $15,000
Repairs: $35,000
Other Costs: $4000 (closing, inspections, holding etc..)
ARV: $75-80,000
Rental: $1000-$1200 a month

Based on these numbers I am just at the 70% rule. But since I'm holding the house for a rental, I don't have to be strict with this rule (Thank god it's not the 70% law ;)). The below explanation is why I think this is a good deal.

I'm paying for the house in cash. The repairs will be done with credit and paid off in 2 months. (My job affords my this). Monthly holding costs for the house will be tax and insurance. Should be around $255 a month. I'll have 70-80K in equity by the end of the rehab and can use the house to get a HELOC for the next deal or refinance the house and use the money for another deal. If I had to, I could sell it an make a little profit, but I'm in this for residual income. 

All repair costs were based of J Scott's book. The Book on Estimating Rehab Costs. I over estimated costs to cover myself and then built in a $5000 buffer...just in case. I can basically be off by $8000 and still be okay. If the inspection comes back without any surprises. then I'm good to go.

Here are some pictures. Someone liked brown a whole lot. (gross)