All Forum Posts by: Jason Long

All great answers! Thanks for your insights in how you view these situations. 

This is to start a discussion about something that is very opinion oriented. We all know losing money on a deal is bad. And there has to be a break even where it was worth your time. But, then there are those times when you bought a property right, fixed it and sold it for a nice profit. My leading question is referring to the last of these options. 

Can you make too much? What I mean is do you put in basic options to make an extra buck or do you upgrade things that don't have a ROI per se to give the new owner somethings nicer? In turn, not making as much but giving the new owner more value just because you can.

I can expound on this by an example I've run into. No matter the finishes you choose, you're still stuck with comps to determine your ARV. I am installing a patio French door on the back of the house I'm working on. I could have gotten a standard insulated glass unit or low-e. The low-e cost $46 more. I'm probably not going to make $46 more because I chose to use it. The new owner, however, will benefit from having it while the sun is blaring down half a day (door faces east.) do you make the call to make more money in these situations or do you feel, "I'm making enough on this deal, I'm going to give them something nicer."?

Love to hear some opinions on this. 

I do now @Scott W. haha No, I am doing this full-time. 

First was to mow the yard and remove some of the brush to be neighborly. I have approached the demo with removing all the interior doors first and then a room at a time. I started with a bedroom: removed the trim, window casings, outlet/switch covers, and popcorn ceiling. Moved to the next bedroom the same. Third bedroom. Then the half bath. Stripped it to the Sheetrock, removed popcorn, and cut the floor out. Reframed the floor, subfloor installed. Stripped wallpaper and wall board from hall. Painted popcorn removed. I still have to frame in for the hvac return. Gutted the laundry and I'm assessing subfloor damage. I'm also in the process of gutting the closed In garage/den to the studs. 

I am taking a tractor over Monday to clear the lot of overgrowth.

Already had habitat come pick up a truck load and the trash pile is neatly stacked in a bedroom. Will get a 15-30 yarder when I'm done demo'ing and can see the size I need. Any suggestions on dumpster companies? I called Eco, but they gave me a per day fee schedule. Others talk about a set price for drop off / pick up. Thanks!

@Mohammad Akif Thank you for the response! This is most definitely a post for a different forum area, but I will add that the reason I haven't elected is the confusion. I have lots of questions like is it worth it to do 1-2 properties a year/what else do I have to track and file/ how do I file taxes differently from then on etc. I get that you can designate a salary and take distribution at a lower % bracket, but that's about all that's clear. After I learn more about it I may move in that direction. 

@Scott W. you are absolutely correct. The $705 was misrepresented. I should have said acquisition costs. Selling costs at the numbers/timeframe I've given are estimated at $6,195. This includes closing/holding/interest, but not seller consessions. I left this off my initial post, but the final %arv and profit doesn't change. This was factored in and not posted. Sorry. 

This also doesn't include taxes, which quite frankly scare me to death. (Single member managed LLC, no s-Corp election at the time, primary income; active)

My hopes are to ask 115-119 if the market supports it at the time. I'm just basing my analysis off of current worst case scenarios. As these things are always fluid and changing. Ie: made the decision today to make it a 4/2.5 one could be office. Just have to run the numbers to see how it affects the basis. it will definitely improve the layout of the home and solve a problem I already was facing with a wall rebuild. 

As for the permits/ work: I'm more than comfortable setting a new 200 amp panel and wiring. I'll be paying a licsensed master electrician I trust to verify the work and set the new meter and disconnect. As for plumbing, I'll be doing the work, buying the materials, etc. Research has shown I can pull my own permits for an owner occupied property. Which I will be by the time I get to that stage. If this is incorrect, I'll just pay a plumber to come "redo" it. This will be new full bath (supplies, drain, vents) and moving a water heater location. I'm up to speed on the new codes. (Purge must fall within 6" of ground, plastic overflow pan, etc.)

I would just get my contractor and building law licenses, but sc requires you work 1 year under a license, so I'm kinda screwed on that route at the time. 

Hi! Thanks @Scott W. I know it seems low. It blows my mind though, reading about areas where people buy a gut remodel for >$350k with another $200k rehab! 

I'm getting every quote in writing and handing out w-9's as I accept them. The quotes for roof, new hvac and gutters is right at 10k. That leaves me 20k for materials and monthly's. I've created a list of components, sku's and pricing. You have to remember that the labor is all me. I'm utilizing sales, discounts, etc. I've price searched and narrowed down all materials this way. 

I'm sure I'll get to the end and will have missed something. But, I've tried to meticulous about the planning of this. I also made sure that in buying I had a great deal of wiggle room to still be profitable. 

I'll be updating this post along. 

Oh! Ok. Thanks @Lizina Green

Thanks @Ayodeji Kuponiyi! Looking forward to this journey. 

Ok, so how do I add pics in a reply? The reply box doesn't give me image options. Should I just edit the main post? Thanks!

I viewed six properties after vetting listings before finding this one. 

REO 1300 sq/ft 2 Bd, 1.5 bath 70's ranch in a nice neighborhood/location that's desirable according to several RE agents.

Converting to 3/2.5, replacing roof, HVAC, Windows, doors, flooring, fixtures, electrical, trim and lots of updating. Adding bath, complete gut and update on kitchen and 2 other bath areas. Subfloor repair in 3 areas and sill repair/runoff management in yard. Masonry work on front and, budget allowing, a deck on back will be added.

Purchase contract went in at the end of January. I have an amazing RE attorney who was watching out for my best interests and discovered an unsatisfied Sr. Mtg. After personally tracking this down for the title company and sellers atty, was able to close May 9. (YES. 4 mo. !!) 

Similar comps sold on the last 120/.5 mile are $105-115k

100% funded Private money at 8% due on backed

ARV: $105k (projected worst case scenario)

Purchase: $27k

Closing: $785

Holding: $384/mo

Selling RE: 6%

Rehab: $30k (projected worst case scenario)

4 months to rehab, 3 months to sell

Total money projected: $63,195

%ARV: 60%

Projected profit: $35,505

ROI and ROIA: Infinite

I'll post pics of what I'm starting with soon. Thanks for looking!