I haven’t been on BP in awhile, and I just noticed this post! I would like to clear the air as I’ve received some messages about the property and the experience. I’d like to start by saying that the specific area in Englewood (around 65th and Halstead, near the new wholefoods) is definitely an area you should all have on your radars. Activity down there is growing – projects both small and large – and there are great deals to be had. With that said, like many other neighborhoods you have to evaluate properties street by street here.
Now to the numbers – things didn’t go THAT well, but overall we did good. The biggest hit to me were financing “success” fees, for a service that really wasn’t worth it. Anyone of us can get online loans without help, and we shouldn’t have to pay a success fee for doing this.
Like all projects, there were hiccups along the way and unforeseen conditions. Here are the numbers:
Purchase: $52,000
Closing Fees: $5000
Finance Fees: $11,000
Rehab Costs (contractors, material, holding costs): $104,000
Resale: $215,000
Realtor Fees: $12,000
Closing Costs: $12,000
Buyer’s Concessions: $6500
Project Earnings: $12,500
Note, the numbers are rounded out, and also the earnings were then split amongst partners. I’m not going to get into too much of the details, but lessons learned include:
-Schedule is important, but don’t rush too fast. Take your time to correct problems such as water/moisture/mold, etc. You can’t correct these by going fast. Do things the right way, and it won’t haunt you later. This likely resulted in several thousand dollars worth of lost profit.
-I don’t know how to say It b/c trying new creative financing methods inherently means taking a risk -- but it’s important to do your homework and weigh all of the options when it comes to financing. This project should’ve been $11,000 more profitable.
-Contracts contracts contracts. Make sure you have a very clear understanding between partners from the get-go. Contracts aren’t just for legal reasons, it’s a chance for the partners to sit down and flesh out the details so everyone is 100% in-the-know about where risk lies, and what the expectations are both financially and logistically from each person. Unfortunatley for this project, it resulted in unequal risk, and unequal shares of the profit.
As a final thought – there have been some negative comments on Englewood, of course some of it is true and you have to be careful. But for every “bad” thing that I witnessed, I also witnessed a lot of “good” things. I typically visited the project at 7am in the morning and was greeted by moms taking their kids to school, and that is frankly the impression that I am left with. I chose to do this project for financial reasons, and I left feeling satisfied that I also helped to stabilize a neighborhood (where the housing stock is largely abandoned), as incremental as my effect may be.
