Investment Info:
Single-family residence other investment.
Purchase price: $435,000
Cash invested: $52,000
Personal Residence Renovation: Purchased off the MLS within 8 hrs of hitting the market for $435,000. Put 5% down on a conventional mortgage. With in 3 days of ownership, we had the kitchen completely gutted and ready for renovation. Removed a non-structural wall to open up the living area to the kitchen. All design was done by myself and my fiancée. 75% of the labor was completed by a contractor. Finished the kitchen out, moved a closet from a guest room with 2 closets over to the primary bedroom so primary has 2 closets, and refreshed all paint/light fixtures. All electrical outlets and switches were modernized as well.
After all renovations were completed, we had spent close to $32,000 on renovations. Total invested was $52,000. After repair value (ARV) is $539,000. In total, we gained about $72,000 in equity with this renovation and deal. Great learning experience with the renovation and really happy with the results. Hiring a quality contractor made a world of a difference for this project.
What made you interested in investing in this type of deal?
My fiancée just moved to CLT with me and it was time for us to purchase a home together. She was on board for a renovation and so we took advantage of purchase a house that wasn't move-in-ready. This allowed us to buy at a bit of a discount even in such a competitive market.
How did you find this deal and how did you negotiate it?
As a Realtor in CLT, I had saved searches set up in many neighborhoods that I was interested in buying into, within 10 mins of this house hitting the market (and my email) I had a showing scheduled. Once we toured and I pulled a comps list, we were ready to make an offer. After some strong negotiating that hinged of us not willing to work with the sellers if they didn't accept our offer that night, we were able to put the house under contract before multiple offers came in.
How did you finance this deal?
Conventional mortgage with 5% down. Renovation was with cash out of pocket.
How did you add value to the deal?
Renovating the kitchen and creating an open/modern feel in the living space of this house really puts in on a different level. Adding recessed lighting, new paint, new electrical, and light fixtures completely changed the appeal of this house.
What was the outcome?
Good equity change and possible refi in the next 6 months be able to set us at 20% equity and eliminating PMI. This will make a great flip in 2-3 years after living in it to avoid taxes on the gain or rental in the future.
Lessons learned? Challenges?
Lots of renovation lessons learned. Hiring the pros is worth the money as long as you spend your time doing higher $/hr activities. Contractors (if they are good) will do any job faster and better than I can. Struggling with finding a good fridge based on supply issues. Also, went over budget on the renovation by $7,000 due to added costs of the electrical work and underestimating the countertop expense.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
If you are in CLT, DJI remodeling was fantastic. Quality pricing and even better work. I acted as my own realtor and would recommend myself too (haha).
