All Forum Posts by: Patrick Riley

Been a while so I thought i'd share some updates...

The roof is finally done!

As you can see, I have also replaced the upstairs windows. I also removed the sliding glass door to the upstairs deck that has been demo'd and framed it in for a window

Here is a view from the rear. The overhang over the existing heat pump location has been removed a new unit will be installed shortly.

Lots of other work as well that is not quite as interesting. Trying to keep it to the highlights!

UPSTAIRS WINDOWS & SHEATHING

The upstairs windows were huge but were single pane with questionable (nonexistent) waterproofing. The window flanges were also nailed directly to the framing with sheathing installed on top. This lead to some water ingress & sheathing rot. I replaced all sheathing and re-framed the opening for a new 60"x36" sliding window.

CHIMNEY REMOVAL

Fireplaces are great but I don't want the liability that comes with renting out a house with one. It also took up quite a bit of space in the living room and the chimney discharged only a few feet away from branches/trees. We decided to remove it.

This job was extremely challenging. I tried to find contractors to do this for me but none were interested. Although the chimney was just single wall corrugated steel, i couldn't just cut it and push/pull it over. The garage and carport were right up next to it so it

 would have been too risky.

The plan we came up with was to rent a towable JLG lift from Home Depot and cut it down section by section with an angle grinder. To prevent the falling chimney sections from causing damage I rigged up a pulley system to lower each piece slowly once it was cut loose.

You can see how tight the space below is.

Looking back. We had to have the garage door open just to allow space for the outriggers to extend. It took about half an hour of positioning to back it into the perfect spot. Even then, we had to cut down a tree to give the boom a path to the chimney.

Note the tree on the right that had to be cut down. The chimney in this picture has been taken all the way down to the roof penetration. The remaining bit can be seen between the two trees.

Voila!

EXTERIOR

The flat roof on the extension had more problems than having a deck built directly on top of it. The back had gutters that had completely rusted through resulting in extensive rot to the siding and sheathing. The window, which was a non-insulated utility window was removed and the sheathing and siding replaced.

The house also had a sketchy overhead electric service. Along with a complete electrical replacement, I dug a trench and had my electrician install a new underground service. The soil was extremely rocky. I rented a 2 ton excavator to dig it and it barely got the job done. 

Before shot of the back of the extension with some wood panelling from the top floor. Note the overhead service and meter pole location.

Midway through sheathing demo

New sheathing going up

Housewrap on and one sheet of LP siding installed. I put this middle piece on first because I had run out of weekend and needed that sheet installed so the electrician could run the service through the wall.

Mostly done with the back wall. Trim on the bottom of the wall has not been installed. The deck and fascia has also been removed in this picture. My electrican also wasn't able to get the service done so rearranging my work wasn't necessary.

I also had to cut out the roof/deck around the fascia and soffits. They had simply built right up to them and packed the area with a lot of roofing tar. I had to get some clearance around this area so i could get the fascia installed before the roofers came in.

Thanks. I'm beginning to warm to the idea of gut job projects if you can get them at a competitive price. Fewer budget killing surprises if you're already planning to replace everything anyway and you can do the work right.

Thank you! I am a definitely a perfectionist which isn't always practical or beneficial in real estate but it helps me sleep at night! Very to excited to see how the vacation rental model plays out. It's definitely more engaging than my long term rental projects so far.

DEMO

No major surprises except for how poorly the extension was constructed. I was concerned that the fiberboard i found behind the wood panelling could be asbestos containing material so I had it sampled. It came back negative for asbestos which was a huge relief.

This was the kitchen, looking back into the addition.There were several layers of flooring, the last of which was particle board glued to the cement. That was fun to get off. You can see just how questionable the electric was. The conductor was literally just laying along the floor. I will be completely replacing the electric system, conductor and all.

Here is the view from the upstairs bedroom looking towards the front. The strange catwalk setup blocks a lot of light and makes the front area feel less spacious than it is. I plan to replace it all with a spiral staircase but will keep it around for demo and construction for ease of access.

The fireplace will be removed. It takes up too much space and the chimney cap is less than a foot away from a tree. I typically do not want tenants to use a fireplace anyway for liability reasons.

The downstairs bathroom was nasty! You can see that the property has central air. It has a packaged heat pump for heating and cooling. Never seen anything like it.

Much better! Same issue with the particle board subfloor.

A peek at the upstairs. The small room on the left in the foreground is the upstairs bathroom. Note the sliding glass door. They actually had a deck built on top of the extension which explains some of the water damage on the extension ceiling. Dirt/leaves got between the decking and the extension roof, holding moisture. I love the deck but it has to go. It's hard enough to maintain a flat roof without just nailing decking over the top.

Deck on it's way out. Just not a practical idea.

Enjoying a morning coffee at the local marina. It's about a mile from the property with a bar/restaurant and slip rentals.

It's always difficult to objectively evaluate an investment property that you also want to use and enjoy yourself. I always try to avoid these emotional tightropes but when a wholesaler offered a contract on an A-Frame house about a mile from a nearby lake & marina I was intrigued. I walked the property and it was clear it needed a full gut rehab but with the right purchase price, though, it could be the elusive AirBNB property that is also a fun vacation home.

Based on my estimated rehab cost, I worked backwards to determine a purchase price using the 80% rule. With that I calculated my PITI if I financed nearly all of my all in cost.

On the revenue side, I reviewed comparable nightly rate and occupancy data with AirDNA and arrived at a monthly revenue figure. Subtracting PITI and OpEx, it appeared that I would still be able to make a small profit with reasonable margin with almost no money of my own in the deal. I negotiated with the wholesaler and we had a deal!

Purchase Price: $37.5k

Rehab: $75k

All in: $112,500

I am ways into the rehab process as of this post but I will periodically post updates and at some point I will catch up to current progress. Below are some before pictures. 

I have a class that night but going to try to get out of it!

Independence Ave can be pretty rough, especially just south. If it's pretty far West closer to KCU it may be a little better.