All Forum Posts by: Katie Neason

Look at the comps. If the comps in your price range have new Windows, change them. If not, leave them. 

In our area, the appraiser will look at comps in the neighborhood or close proximity that have sold in the last 6 months. They should not look at the purchase price that is over a year old. We typically hold our houses less than 3 mos and increase the value 1-2x as much. Depending on the type of loan we may have to jump through hoops but the original purchase price does not impede the sled price as long as there are other comps to support it. The length of time you have since purchase should be a non event. 

You make your money when you buy the house. If you bought the house at retail it is difficult to drive equity. If the house is livable and the updates are minor and you are going to use it as a rental, without knowing what the updates are, I am not sure why you would do the updates unless they are going to drive rents higher. 

$5,000-$5500 is what I pay IF the electrical panel can handle it. Which I doubt it can. $2,000 for new service.  From there it depends on if the entire house will have to be  rewired to bring it up to code. 

@Kathryn Bowden I do primarily sick to Bryan College Station. It is a hard enough business when you have the competitive advantage of knowing your market. To go outside of our market we would have to identify a competitive advantage to make sure we weren't the dumb money! Best of luck on your first flip!

As far as best bang for your buck, the best way to know that is look at other comps and see what they are doing. You should do at least that and a little more. We typically improve our flips to a higher standard than other flippers in our market and we tend to set the comps. It can be a scary place to be though, especially on your first flip (or your last flip...right before the market crashes. Ha!). Even though we do more than our flipping competitors we never do all that we want to. Our Plan A exit strategy is to sell to a retail client.  Our Plan B or C is to rent it out, so we always make sure our all in cost will support the market rents for the house in the event the market changed and we had to rent it out.

I can speak to the rezoning timeline. We recently replatted, abandoned easements and rezoned an urban property for infill development in our downtown. The process can vary wildly based on the city, the acceptance of the project and your ability to manage and lean on professionals to hit their deadlines. In our situation, the city was very supportive, there was no community opposition and the professionals hit the necessary deadlines (but not without a lot of managing) and the process took 6 months. Fortunately, the property we were redeveloping had rental properties on it and the project cash flowed throughout the entire process. I too am going through the due diligence on a similar redevelopment of a vacant historic building that will require rezoning. Having to hold an asset for an extra 6 to 18 months to get it rezoned will negatively impact returns for investors. We have made the property closing contingent upon receiving the rezoning. It will save you on holding and financing cost and reduce the risk of it not getting rezoned, however you will still be spending significant money on drawings and fees. I am only addressing one small piece of your larger question but hopefully it will help.

Steve Mobley at Extraco Bank and/or John Bush at American Momentum.  Used both for flips, development, new construction, and commercial properties.

Sounds like you may not be ready for the opportunity. I am not familiar with your market, but in our market good deals listed in MLS last about 2 hours. If this is as good of a deal as you are thinking it is probably under contract. I had to look at A LOT of houses before I was able to get my first one under contract. While the money wasn't the issue, we would want to look at the house, have the contractors over, run all the numbers and if everything worked out make an offer. Once we started making offers we learned the house was well under contract. To be able to act quickly you need to have the finances in place before the deal shows up so you can get it under contract and then work out the details in the 5-7 option period, but like Penny said, there will be other houses. Hopefully this will aid you in getting the money set up so the next one you will be ready to buy.

@Brian Adams Thanks for the reply! That is helpful. My past couple of projects have been smaller and the fee wasn't that big of a number, but it gets pretty big as the deals grow in size. It probably makes sense on a rezoning, development, construction deal to split the fee with half a purchase and half at substantial completion. Devil is always in the details. I appreciate having a sounding board as I muddle my way through it. It there a 'magic" number on the total return/exit side (15% 18% 20%)?  I am trying to back into what my piece could look like.  I envision this project having a 5 to 7 year hold period. 18 months will be construction and lease up, season for a bit and do a cash out refi or a sale. Not sure if that information helps bring clarity to your answer or not.