Hey everyone,
We are currently going through a condo conversion in the Jamaica Plain neighborhood of Boston and thought I would share some notes with you all.
Deal Overview
- ● 94 Saint Rose St JP
- ● Legal 2 Family
- ● The existing layout was 3BD/1Bath for each unit
- ● Purchased on February 26 2021
- ● Purchased for $750,000
- ● Financing for $980,000 with a hard money lender
- ○ This included $300,000 rehab funds
- ● Estimated time to completion 10 months
- ● Rehab Budget $400,000
- ● ARV for 2 condos $1,800,0000
How we found the deal
This was a lead that was brought to us from a local agent as a pocket listing. Agent got the listing from the homeowner but before putting it on MLS he reached out to some local developers. We got the call on a weekend, drove out to the property quickly, ran the numbers and made a cash offer for $750,000 (Asking price) all in a matter of hours. We got the offer executed over the weekend before anyone else got a chance to look at it.
2 important lessons here:
- - You need to be quick in analyzing deals and act fast. It’s a very competitive market and “speed to offer” makes all the difference.
- - Establishing yourself as a home buyer in the community. We struggled with this in the beginning but now we tell everyone that WE BUY HOUSES :) so agents, wholesalers etc are sending us deals
How we financed the purchase of the property:
Worked with a hard money lender for 90% of the purchase price and 80% of the rehab.
We borrowed a total of $980,000 (for the purchase of the property and renovations) at 1.5 points and 10% annual interest.
Construction funds are released in draws as we make progress with renovations. Sometimes you will need to have cash in hand to pay the contractors as they don’t like waiting too long, and when you request a disbursement from the hard money lender.
Hard money lenders are easy to work with and quick to issue payment etc but the drawback is that they are more expensive than a traditional bank.
Renovations and scope of work
- ● Full gut rehab of the existing structure / Demo + Cleanout
Significant demo cost, as we are changing the layout completely. Removing 2 layers of old siding and a lot of dumpster fees $28,000
- Framing the inside of the units based on architect specifications, install all new windows.
$34,200
- ● Remove existing siding and install new $31,000
- ● All new window order $16,200
- ● Install new roof $9,000
- ● New hardwood floors installed throughout $22,500 ($7/sq.ft)
- ● All new kitchen and baths cabinets and vanity $39,000 (including quartz counters and SS appliances)
- ● New floor tile for the 5 bathrooms and kitchen backsplash $13,200
- ● New electric $32,000, plumbing $36,000, HVAC $22,800
- ● New insulation $14,450, drywall/plaster $18,280 and fresh paint $13,900
- ● All new finish carpentry, doors, trim etc $17,900
- ● New paved driveway $6,100
- ● Tre removal and landscape $8000
- ● Home Depot / Koopman Lumber/ Amazon + Wayfair etc $30,000
- ● Staging + Interior Design $7,000
- ● Permit Fee, Architect Fee, Surveyor $10,000
- ● Portable toilet, dumpster etc $5,000
Total rehab estimate $414,530
Permitting process:
In order for us to get a building permit to do the amount of work we described above we needed to do the following:
- - Get a surveyor to complete a plot plan showing the property line boundaries and setbacks
- - Get our architect to come on-site and prepare as-built plans and new plans showing the new floor plan layouts, elevations etc
- - Needed to hire a structural engineer to provide framing plans since we are moving load-bearing walls to create the open floor plan.
- - Once we got the above plans then we filed for a permit with the Boston building department as a general contractor.
These are the documents we submitted:
- ● GC License and Workers comp affidavit
- ● Contract between owner and builder
- ● Architect plan
- ● Structural plans
- ● Surveyor Plot Plan
- ● Covid Safety Plan
- ● NFPA 241 Report
- ● Mattock Higgins required
- ● Permit Fee Paymemnt
Be prepared to wait 30-60 days for a permit to be issued in the City of Boston. (In the case of a long-form permit/ Alteration):
Lessons learned and tips to share:
- - Why buying with a hard money lender gets very expensive and can kill the deal. A local lender would have saved us $50,000 in interest.
- - We lost 3 months in the permitting process. Moving forward will need to do a lot of the leg work before we buy the property (surveying, architectural, structural)
- - Ask for a longer closing time to accommodate the above
- - It's extremely important to get bids from many different contractors as sometimes they vary significantly. We had framers quote $20k more than our budget (just for laber).
- - It’s not easy to turn a big colonial house into condos as it was structurally built as a single-family. So much easier if you have a duplex or a triple-decker.
I will keep you guys posted as we make more progress.
Currently, we have rough inspections signed off and will be moving into insulation and drywall.
Still, a lot to be done but these condos will be amazing.
