Hello everyone!
It's been a while since I reported on this project and for good reason. There were no updates. But finally, I can share something meaningful.
We FINALLY got our plans approved by the city's Planning Office and got our permits in January '19. Once we received the permits, we had to re-run our numbers, and due to the enormous amount of months delayed (15 months without any work being done), Hard Money interest, architect fees, city fees, etc, it was clear that this project was no longer was a viable investment.
If we were to continue to create the addition we would have had to raise more private money and would eventually sell it at a significant loss even if we were able to finish the home in 6 months and sell at the highest market comp, which isn't guaranteed of course.
Because of this, we determined that our best plan of action was to sell it now, get your money back, pay out our current investors and HM loan and move on. It was definitely a learning lesson, and dealing with this HPOZ in the future is not an option.
Thus, we were able to sell the property to another investor who will proceed with finishing the project. Since they are proceeding with permits and do not have to go through the costly process we did, it financially makes sense for them.
We are now moving forward in this new slowing market with eyes on conservative and market-condition-appropriate deals (fix & flips and STRs).
From this deal:
PROS: Lessons learned (keep away from HPOZs for the most part)
CONS: 1. Was not able to complete the project to finish 2. Was not able to get our private investors the return we wanted 3. Had money tied up in this deal a year longer than we planned
This business is a marathon and not a sprint, so we are still moving forward and loving the biz.
Any questions, feel free to post here or DM.
Thanks!
sjw
