All Forum Posts by: Matt Spicer

On 11.19.14 I purchased my first foreclosure for investment purposes. I acquired the property for $30,001.00 from HUD and was able to close in only 14 days on the property.

I am consolidating threads so it can help be see the entire process in one place.

First the home we purchased was 5 blocks from my current home and comps for the area were 90-110 for the size home depending on the if it was updated. We used the conservative ARV of $90,000 and we have estimated $30,000 in repairs and improvements. We followed the 70% rule ($90,000 x .7 = $63,000) deducted the estimated repairs and put in the offer of $30,000.

Here is how the house was:

My original plan was to update the windows and all the plumbing, It had various updating through the years and was a mess of black pipe, copper and pvc.   I also wanted to add a half bath to the main floor and have a presentable bathroom and kitchen I would be content to have in my home.

I did all the demolition of the bathroom and kitchen to reduce costs as much as possible.  We had a couple of small surprises.  The main water line was leaking at the foundation when we had the water turned on by the city and the relatively new furnace had a blower that needed attention.

One other issue that I didn't account for properly was the lead paint that covered the house.  I quickly had to redirect the money I had budgeted for painting the outside to covering it with insulation and vinyl siding.  

Here is the finished results in 43 days from closing.

Kitchen

Half Bath

Living Room

Main Bath

Bedroom 1

Bedroom 2

Bedroom 3 (more like small office)

During the first weeks of the remodel I started to like the house and decided I would rent and hold the property.   I found a couple that recently married; one works as an art teacher at a local school and the other works for Amazon.  They were interested in a 2 year lease agreement @ $625 which is slightly below market value in the area but a 2 year lease was very attractive to me.   

In the end I came in under budget @ $27,912.64 including one small upgrade I made in the kitchen for granite counter and under-mount sink.  I would have rather waited for the laminate counted but I had a tenant moving in January 1st and I could have the granite faster.  It was $600 more than I had budgeted but it all worked out and the tenants love it.

All said and done I am happy over all with the experience.  I plan to put a mortgage on it for $40,000 to use forward on the next property.  I wanted to do the entire deal with cash just to have a better feel for how much was being spent and the small things didn't add up in the end.  I believe this was a good approach for me and now to find the next property.

I would consider analyzing what immediate goals you have and how much risk you are willing to take.   My first deal after paying off our personal property was small and we are in the process of finishing it now. 

I chose to pay off our house to have the equity to fall back on if needed and increase cash flow by eliminating bills.  How comfortable are you with the thought of turning a loss on your first deal?  You're chances are much higher with out direction..  If you're single why not look into house hacking for your first move and you could maybe reduce, eliminate or profit from your housing situation. 

@Bill Gulley  Sorry the toilet was the first example that came to mind, albeit a bad one.  Im not digging for quarters in the sofa, I was just using that as an example.

@Gail K. the coupons at a discount are a great idea.

@Steve Vaughan the price point on the rehab is ARV of around 100-110k . I had a budget of $35k for renovations. The purchase price was $30,001 and feel I did alright. No home run but a solid start.

This isn't my full time job, just diversification of my assets. I will be contracting the work out.  My Dad owned a construction company and I'm very familiar with contractors and sub contracting part you aren't comfortable or wanting to do yourself.  

I think I will be rental ready by January 1st, but hoping for sooner. 

I am working a cost analysis for my current remodel and wanted to ask the users of BP where they are looking for rehab materials.

• Lowes / Home Depot
• Craigslist 
• Habitat for Humanity
• Discount Stores (Home Emporium, Ect)

I initially budgets based off the big box companies and included a 10% buffer for repairs.   After sitting in bed last night browsing the local Craigslist ads I found some locals that were upgrading the standard builder grade toilets with nicer pieces.

I picked up an American Standard toilet for example @ $20 and even if it needs a flush kit it will still be less than the lowest grade they sell at my local Lowes.

@Barima Opong-Owusu 8% is crazy high for current Heloc rates.  I would spend a little time shopping around with your local credit unions. 

Kitchen and bathroom demo is completed.  Over the 92 years there had been 2 layers of laminate flooring installed and some of the $.50 per ft carpet from lowes installed over that.   

I put the offer in with the intent to flip it.  The numbers made sense, but I think now I'm going to rent and hold it.  I'll refi the property to pull my initial investment back out to re-invest. 

6 months ago I payed off my mortgage in less than 5 years and before my 30th birthday.   I a felt it was an accomplishment but the main question I had was, so What's next?

Two weeks ago I put a bid in on my first investment property and will be closing on it tomorrow.  I want to use this to track the property and hopefully add some helpful content for others.

Here is the current state of repair the property is in.

We have estimated the ARV to be $90,000 and we have estimated $30,000 in repairs and improvements. We followed the 70% rule ($90,000 x .7 = $63,000) deducted the estimated repairs and put in the offer of $30,000. You can always go up right ;), our offer was accepted.

Look for more to come.