Project Acquisition
We bought this one from a wholesaler. I believe we paid a $7000 assignment fee. We used private lender IRA money to finance it.
Project Challenges and Obstacles
This was a pretty extensive rehab, involving some floor plan alterations, and functional obsolescence (a floor plan that was old fashioned and not relevant to today’s living standards) on the second floor. We also had issues of water intrusion in the basement (the previous owners told us it was just a leaking hot water heater…ha!). Once we solved these issues, the rehab went smoothly.
Project Analysis
We purchased this one for $40,400 with a $7,100 wholesale fee. Our rehab came in at $85,000. After purchase, carrying costs (which were higher because we used hard money on this one) and sales costs, our profit came in at a little over $22,000.
Take Aways
Never believe the previous owner’s explanations for apparent defects. Always do your own due diligence. It didn’t really matter much in this case because we were finishing the basement anyway, but we would have budgeted the waterproofing better if we were anticipating having to redo the french drain throughout the basement. Also make sure you estimate landscaping and tree removal costs appropriately. They can get pretty extensive.
