All Forum Posts by: Doug Simpson

@Rich Baer, listing has no mention of mold, just that property is sold as-is.  I'll be using a company for any parts that I can't do myself, as well as conducting an air quality test to verify end results before selling 

@Sam Lin, I would contract out insulating, hanging and taping drywall, and refinishing floors, everything else I would handle unless I were running short on time.

@Steve S., I appreciate the breakdown, makes a lot of sense, so long as I can get the funding arranged I'm going to jump in with both feet

@J Scott, I am looking at financing for this project, my projected fixed costs are about 25k, 11k closing costs on both ends, 1200 in taxes for 6 months, 1000 in utilities, and 12,000 in interest and points.

My detailed rehab estimates are 

~400 for fixing/replacing gutters, downspouts, and soffits

~600 for replacing and painting missing exterior shingles and painting exterior trim

~500 for replacing part of a concrete walkway

~1000 for new bushes and flowers

~500 for dumpster rental

~3300 for materials and labor to hang new dywall, walls, and ceiling, 100 sheets total

~2300 for all new exterior insulation

~300 for new baseboard trim

~2000 for new interior paint

~900 for new doors

~1300 to refinish wood floors

~7500 for new water heater and furnace

~2000 for kitchen appliance package

~4000 for new kitchen cabinets, installed

~600 for new tile, kitchen floor

~2000 for granite countertops

~500 new bathroom vanity, installed

~1000 new tub

~600 new bathroom tile floor

~5000 for HVAC mold remediation

~5000 to solve dewatering issues

~10000 Misc. expenses. 

I have some experience with remodeling, this will be my first full flip though.  I have some other cash savings, and will be continuing to make good money at my day job while this is going on, so I'm not terribly worried about minor surprises, with a solid plan I feel like I can stick to budget and to schedule, that seems to be more of a personal issue for some people.  Working with contractors and making things happen on time and under budget is what I do day to day, so I have no fear about transferring those skills to this industry.  If I get a major surprise, then the lender takes over the house and I'm out all the money I invested, and hopefully learned a valuable lesson.  At the end of the day, it's just money, and I've got to jump in sooner or later 

@Chris Seveney, I appreciate the advice, I've allotted for professional remediation of some components and an AQT when remediation is completed before I start putting things back together, the last thing I want to liability down the road or tearing out a bunch of stuff I just replaced

@J Scott, Realtor had an ARV of 162,000, my analysis was 150k, worst case scenario is a similar house just sold around the corner with a lower level of trim at 129,000. Property is listed at 40k. I can provide a more detailed breakdown of my costs if you would like, those are just my big picture numbers. I appreciate your input, some of my numbers I pulled out of your book, some are based on experience, and some are shopping around online locally.

@Jason Reynolds, thanks for the offer, I'll definitely be reaching out to you if this property works out.  I won't know what the state is until I get the property under contract and can check out the basement, I am assuming that it already has a sump system installed due to its close proximity to the water, and hopefully it's just the pump that failed.  Gutter system is high on the to-do list though, to prevent and further issues

@Russell Brazil, not too close to either Baltimore or DC, so I'm not worried about paying city prices for renovation.  I'm also planning on doing a fair bit of work myself, and subbing out some of the larger jobs just to get things happening faster.  As far as the mold goes, I'm not terribly worried about it, it's a coastal town so everywhere has mold.  A 2/1 will move, but is obviously not as desirable as something with more amenities, my plan is to rehab and refi after 6 months to get the investor money out, then spend some more time on my own money finishing the basement to make it a 3/2

Hello all, I've currently analyzed a fix and flip, and am working on getting hard money to move forward with, but I would appreciate your thoughts on the deal.

It's a SFR, ranch, ~900 ft^2, 2 bd/1 ba, with an unfinished basement, in a desirable area in Maryland. It's a bank REO, it has sat for a while with standing water in the basement so there is surface mold throughout. Exterior needs minor work. The mold issues appear minor, so it will most likely just need new paint throughout, with a remodel in the kitchen and bathroom. I have figured the deal in a worst case scenario type situation, which would involve replacing the water heater and furnace, excavating foundation and placing drain tiles, and complete gut and rebuild upstairs. I am leaning towards a broken sump pump or busted plumbing for the water, but it is impossible to tell because basement access has been roped off due to the bottom couple of stairs falling away. My thoughts are it has been sitting long enough for the mold to move upstairs, and it were foundation related there would be more water after the heavy rains we have been receiving lately.

Now, I have a 120k spread between asking price and ARV, determined by my realtor. I had the ARV priced slightly lower, at a spread of 110k, and worst case scenario it is a spread of 90k.

Estimated rehab costs, again at worst case, total ~50000.

Exterior costs, including gutters, soffit, siding, landscaping, and concrete repais, all minor, total ~3000

Interior gut and refinish, including demo, drywall, insulation, baseboards, paint, doors, total ~10000

Replacing HVAC components ~7000

Kitchen Remodel, including appliances, cabinets, floors, and countertops, total ~9000

Bathroom remodel, including vanity, tub, floors, total ~2000

Mold Remediation in HVAC ductwork ~5000

Dewatering issues ~5000

Misc. costs and overages ~ 10000

What do you all think?  These figures would bring the house up to par with other homes in the neighborhood as far as fit and finish, and again, all worst case scenario

To all, I appreciate all of the help and thoughts along the way so far, apologies for taking so long to get back, a lot of things have been happening very fast.

@Valerie Hiscoe, Those are all good thoughts, and I truly appreciate your input.

However, I have decided to drop this deal, I went back for my survey and discovered what might wind up being a serious structural issue that was covered up on my first go through.  When an addition was put on, they built the second floor using the rocky slope directly behind the building as support.  It appears that rainwater over all the years has loosened the support system that was put into place.  It doesn't look like it's about to fall down tomorrow, but I can see the potential for an issue in the next couple of years.  Adding this into my other estimates starts pushing this deal into more money and a longer time frame, so at this point I think my money and effort would be better spent elsewhere.

I'm hot on the trail of another deal though, and will post a link here when I finish making that post.

Again, I appreciate all of your input

@Jason McDougall Thanks for the encouragement. I'm working on getting a new realtor to pull comps for me, haven't heard from the first one I talked to since Monday, she sounded a little miffed about the fact I was asking her to do work for me on a FSBO (although I did try and sweeten the pot by saying I was trying to build a relationship with someone for when it comes time to resell.) I've estimated about 8 months to do the work, and figured a fudge factor of 50% for a total of one year. When I'm assembling my revised estimate tomorrow I'm going to calculate my holding costs, but I'm going to fund everything myself so I won't have crazy interest to pay. I realize quicker=more money, but I'm planning on using this both as a hobby and a learning experience, like I said I'm in no rush. That being said, I will ultimately end up subbing out some portions of the job, we'll see what the city has to say about things like wiring and plumbing.

@Jay Dewberry, thanks, I'm looking into building a better relationship with a different realtor who can hopefully supply me with that information.  I will ultimately have some contractors come out and give bids on specific portions I don't feel like tackling myself, but we'll see how the real walk through goes before I waste anyone's times.  Good tip on the offer, it sounds like he's just trying to cut his losses and get out, might be more willing to drop for a quick sale.

@Eugene Kemp, my thoughts as well, my inspection tomorrow should turn up anything glaringly wrong I missed the first time, I have a feeling this is just sort of a right place at the right time sort of thing.  County records show he bought it a year ago at 15K, I can see where he's done some work already, so if he's telling the truth he truly is just trying to cut his losses and quit spending time on the place.

@Mike Sedlacek, I hear ya, that's something I haven't thought of.  Schools appear to be middle of the road at a cursory glance, the big draw in this town is going to be its location on the river though, I'm imagining more of a summer home type of place than a permanent residence. 

@Valerie Hiscoe, see above, very popular in the summer, dead during winter.  My own research as well as the little bit I talked to the realtor shows lots of the distressed properties are being bought up recently (which I assume are going to be investors) as well as a brand new condo complex right on the river, units are selling for 300k+ and almost all are occupied.  The city also just released their new town planning report, outlaying good things coming in the next few years.  I think it could make it as a rental, a quick search on CL shows studios in the area going for 600-700, and a 2bd/1ba house for 1k, it might wind up being more beneficial to BnB it as a summer home during the warm months and just live in a cheap motel or something while I'm kicked out.  I would probably just live there until it sold though, not in any rush, but it would be nice to start making some money back immediately if it won't sell in a short timeframe.  Definitely going to look into bringing contractors in for parts of it.  I know I'm buying myself a second job, but I truly enjoy doing this kind of work and keeping busy, so I'm going to choose to look at it as a hobby that might make me some money, knowing full well at some point I'll be tearing my hair out.

@Brandon Battle, I'll be honest, I've been wrestling back and forth with it since I first went and looked at it, I know this is going to be a massive project that is going to run much longer and much more expensive than I could ever plan for (hopefully not too much though.)  I have continued looking for other properties on the off chance I decide to drop this one, and am actually viewing one tomorrow after I get done with my walkthrough  Wholesaling it is certainly an interesting idea, I hadn't considered that.  I don't know much about the wholesaling game, but I understand the basics.  My biggest issue would be moving to a new area and not having a network yet; I wouldn't know any investors to sell it to.  It's definitely something to look into, the whole easier aspect is very attractive, but then again I've always been a little bull-headed and not afraid of a challenge, which has been my downfall before.

Everyone, thanks so much for the responses, you have all supplied me with a ton of great ideas and things to look for, I really appreciate it

Hello all, I'm investigating my first flip deal and want to get your input, apologies for the long post in advance.  I've been researching and gaining knowledge for quite a while, both online and in-person at local REIAs, and am finally trying to move forward with my first deal.  I was focusing on buy and hold strategies initially, but then found this deal I think is too good to pass up on.

This is a SFR in Cecil County, MD, that needs a fairly significant amount of rehab. The roof started leaking at one point in a back corner of the house and was let go, so both floors directly under the leak, as well as the whole roof in that portion, need to be completely redone. This includes the kitchen and bathroom. The house is structurally sound. The rest of the house needs floors and doors, patch and paint, new windows, some new siding, new gutters, new plumbing, some new wiring, and extensive yardwork and cleanup (for very little yard).

I know this goes against conventional wisdom, but I'm planning on doing all of the work myself.  I'm in no rush to get done, and have the necessary skills to finish professionally, and actually enjoy this kind of work so it will be just another project to work on in my free time, albeit one that makes me money.  I work a full time job that takes up 60 hrs a week, so I'll have some nights and all weekends available.

House is for sale for 15K, I'm going to offer 10, and justify the difference with costs for title search and lawyer (FSBO). A quick walkthrough gut estimate put total rehab cost around 80-90 (my father ran a remodeling and development company while I was growing up, so I have a half decent idea of SOW and costs). My research showed comps in the 175-200K range, I'm waiting back on my realtor for her list, but her gut instinct was 160-180.

I'm planning on going back Wednesday and spend some time nailing down a real rehab cost to make sure my numbers aren't too far off.  I'm calling the city tomorrow to question permits (there's some speculation it might be a historical building and therefore stringent to stricter rebuild guidelines.)  Also, looking into if structural surveys are required, and what the certificate of occupancy rules looks like.  After getting my real rehab numbers (including holding costs) and comps, I'm planning on running a title search, then making my offer, if he accepts I will contact a real estate lawyer at that point.

I do have some worries about selling the property down the line, it's a small town so houses aren't sold frequently, and one of the neighboring properties has been abandoned for quite some time.  This is a slowly up and coming area however, so hopefully these problems go away.

The current owner does commercial rehab in NY, and bought this place to rebuild and use as a summer home, but with the market coming back says he has been too busy to make it down this far and actually do any work on it.

To sum up, lots of work left to be done, and feeling a little nervous about all of it.  

Thoughts?