All Forum Posts by: Kim Hud

@Isaiah Thompson thank you so much for taking the time to review everything! I’m reviewing the bid again to see where we are cut the fat

Since there have been a lot of request for specifications on the renovation I made this post that breaks everything down in detail

https://www.biggerpockets.com/...

Please hop over there to discuss

If you are having trouble accessing the links use these:

Updated Links Contractor/HUD Estimate of $190k: https://docs.google.com/docume... 

Unit 1: https://docs.google.com/docume... 

Unit 2: https://docs.google.com/docume... 

Unit 3: https://docs.google.com/docume... 

Unit 4: https://docs.google.com/docume...

Yesterday I posted about the deal I’m working on and there was a lot of discussion on the $190k renovation (Original Post Forum: https://www.biggerpockets.com/...)

Sharing the renovation plan to get input on cost benefit analysis, feasibility, and advice from tackling similar projects.

If you are an investor and/or contractor who has experience with big renovation projects then I'd really prefer to hear from you.

A little background on this deal and the property:

* Loan: FHA203k - this is a renovation loan so there are requirements for the contractor that can be used.

- Most contractors don’t touch these loans because of how long it takes them to get paid plus all the certifications and insurance then need to have. In my area I know of 3 contractors that do 203k loans. One my realtor recommended was booked up and one was 2 hrs away. The one I went with was recommended by an acquaintance.

- Requires HUD Inspection ($1k out of pocket) after inspection the inspector gives you a specification of repairs estimate

- Timeframe - 6 months

* Property was built in 1794. Based on inspection: property has a new roof, clean crawlspace, not foundation issues, and updated electrical.

* The property has an outdated HVAC system in 2 -4 units, all 24 windows have to be replaced with certain windows, and other quirks you find in an old home; such, back porch needs to be fixed

* Unit 1 is 3 bedroom and 2 bathroom but the 3rd bedroom has a quirk

* Units 2 - 4 are 1 bedroom and 1 bathroom

* Units 2 - 4 have a bad layout. The rents in the property are way under market partially because the Seller didn’t need to make a lot of money from the home and because the layouts are bad.

* Vision: Convert Units 2 -4 into 2 bedrooms and 1 bath. The reason I'm converting is based on comps and property managers saying I can get $1,000 - $1,200 in rent by adding a bedroom. This will get me closer to the minimum $200 per unit that I'm looking for with the potential to bring in $200+ per unit. 

Sharing the below floor plans for you to see the before and after plan:

Contractor/HUD Estimate of $190k: https://docs.google.com/docume...

Unit 1: https://docs.google.com/docume...

Unit 2: https://docs.google.com/docume...

Unit 3: https://docs.google.com/docume...

Unit 4: https://docs.google.com/docume...

Excited to hear what you think

@Alexander Szikla did not budget for buyouts since they are on month to month leases that state 30 day notice. I’ll consider setting money aside but That would be an extreme last resort

@Sean Ploskina not separately metered but I’m going to charge the water back to the tenants. That’s what my current landlord does and it looks like I can do it there too. It will be part of the lease agreement

@Victor S. you would have to look further out of that specific street and neighborhood to find large multi family homes that would be similar.

In terms of renovations some other big ticket items include:

Plumbing

Kitchens

All the Windows have to be replaced

Flooring

Moving electrical since floor plans being updated to turn into 2/1

@Jim Spatzenfeld that is definitely a valid point and one I think about often. It’s definitely a risk but so far one attorney I talked with and one property manager I talked with said that this area of Virginia has been processing them relatively quickly but of course it all depends.

I did not get other contractor bids because I could not find other FHA approved contractors that could work during this timeframe - they were already booked.

@Joseph Dunphy thanks 😊

@Patrick McGrath most about $40k+ of the renovation is on converting the units to 2 bedroom. Some of the units are being taken down to the studs.

So far I haven not found such a property in my area that would have a cash flowing househack while living in the unit.