Deal #3 in the works

This one is going to be incredible, we did a lipstick on a pig, a full gut/rehab, and now this full gut rehab plus tripling the sq ft, ought to be a great learning experience!

Great Job!

We are in the home stretch now. We didn't update much throughout the process but its been great. In just over a month the project will be done. Alot has happened and its been a blast. Instead of doing a rehab/addition, we demo'd what was there down to the foundation, then added double the foundation that was there and went up! We are over budget by 9% BUT prices have gone up about $50k more then what we were thinking. Houses in the area are going under contract during the build/rehab, so today ours should be up on the MLS, with my realtor agreeing to list it for 1% seller commission. You can always check out the Kingsbury rehab under my pics in facebo.. We ended up bringing in a 1/3 partner, and borrowed 1/3, and had our own money for a 1/3, so we are going to come out smelling like a rose. My GC said he has been getting calls from people interested already so we are hoping once it hits the MLS and with the realtor sign out there now, we'll get it under contract in the next few weeks. Check out the pics I have posted in FB and let me know what you think.

It is gorgeous, Jack! What an experience, hunh?

Karen

It has been fun, we have let the GC do his thing for the most part and have been happy with everything so far, except the 9%, but to tell you the truth we had expected to be in it for right about where we are now and with alot less of a sale price. So with the house prices soaring in this neighborhood, we are in good shape. A house around the block sold for $495k last month, it has more sq ft but 1/3 of it is a basement(they say this does not draw the same amount as far as sq ft), it was rehabbed/addition 3 years ago, and no garage. Another house that is in the same stage as ours, is a little smaller, does not look as nice as ours, the floor plan is not as nice, just went under contract for $495k, so we should have no issues breaking the $500k price. Looking for our next rehab now, my cousin may have found one for us, looking into that one now.

what a great experience! and I'm sure it will bring a nice profit too! Good time to put on the market too, I'm sure it will sell fast.

wishing you continued success,

We put the house up on the MLS yesterday afternoon, we had our first showing within 2 hours and they are coming back today. They had a bunch of questions about how we are going to finish the house(inside paint, hardwood stain, cabinets, counter tops, etc... Found out a little while ago that there was another showing this morning, so this may be a great sign! Bad thing is, Charlotte is so hot right now that there is nothing to get off of the MLS and big companies are in trying to get props before they hit the MLS. Prices are 40% higher this year then a year ago and major investment companies have millions they are using to buy everything in the area. One Canadian company just spent $26 million to purchase 560 rentals from one of the investors here in Clt, another company is here with $550 million dollars and buying everything for listing price. Need to pick up the letters and signs so we can find the deals they don't know about yet. Hope to have a contract on this house in the next week or two.

It is beautiful! I know it will go fast!

Karen

I haven't updated this site(project) for a while due to alot going on with this project. My stress level has been through the roof. Way over budget, when I say way, I mean stinkin way. The GC brought this to our attention a week or two before it was supposed to be completed. He upped what we owed him 2 other times after that. To save all the drama, we finally met face to face at the house yesterday, I brought a brother from church with me to make sure I stay level headed and to keep me calm, plus he is a GC and would be able to add in his opinions. The meeting went ok and we are on the same page on the finishing of the house by the end of the meeting and when I walked away at the end the GC asked Michelle about the money we still owe him. She told him she would check with me because his last figures put me over the edge. I sent him an email this morning and he called me within 10 minutes to talk. He was some what humble but had a little edge to him but ended up coming along. We have our final price which if I hadn't mentioned, was WAY over the budget(laughing so I don't cry)but it will still leave us and our money partner with a nice return.

Michelle and I had both agreed that we didn't do what we knew we should as far as a contract with the GC, we went off his reputation, he is one of the top builders in the hot areas, he is the top spender in the Charlotte area at Lowes, so that should tell you the amount of work he does. Right now he is running at least 6 full rehabs or new builds within blocks of mine and more in another one of the hottest neighborhoods. We went with that he was a family man, and a church goer. So we didn't have limits and all that set up in the contract. Just a cost plus 12% with a max on his fees. So Mama Knucks and I had already come to the reasoning that if we get our money back or don't make much then its a good lesson for us. We did not do what we knew we were supposed to do and have heard the pros say over and over again. No more going on trust like someone is going to repsect my money and time like I would.

Anyway, life is good, our rental is rented out with a nice cash flow and we're looking for our next rehab and rental.

Sorry about what happened. You have also provided us will a valuable lesson. So know matter what always have limits and things in writing is I guess what you are saying.

Hi Jack. This is the first time that I've commented on your blog, but I just have to say this....just because someone is a "church goer" and is a family man does NOT mean that they are an honest, forthright person. Just sayin...

Hopefully, you will come out on top on this deal.

Thanks for the update. I'm sure that it was one that you were also not keen on writing. But it is a lesson that many can learn from, so thank you for sharing your experience.

I hope all works out.

Karen

Hey thanks for the post, its all good. We will come out in the positive, the bad part was I see how dishonest folks can be and that is something I hate. I like to think people can be trusted and that folks are upfront, but we always need to make sure we are covered. Keep watching this post, I'll keep it updated with offers and hopefully a contract soon and then the sale with numbers. Later

I hear ya on what some people call themselves and what really turns out to be the truth. And I do believe that we can learn from everything we go through, and right now I feel like I earned a masters on this one. HA HA

Ha, yeah it should all still work out well, the profit margin was already good and then the market has really shot up over the past months, so we are still sitting pretty. I just hate feeling like I have been hosed over and can't trust someone. We know we have been priced a little high during the build and plan on putting the price down $10k-$15k in the next week or so when the house is complete. I hope I can be announcing a contract soon, we are ready to find the next rehab! Hows Myrtle Beach treating you?

Well we have gotten a few offers, most have been low so we haven't even tried to negotiate. Today was the first REAL one, we are asking $495k and they offered $475k, we went back with $489,500 with a $500 home warranty, and they came back with $482k. I think we are going to go back at $487k, hoping to meet at $485k Not trying to get to fired up because we all know even after an offer is accepted, things can fall apart, but we are getting nice and close. We are ready to be done with this one and starting on another project, need to find it still.

CONTRACT!! We got a contract on the house today, daddy needs a new pair of shoes and at the price, I'll be able to get them! Due Dilligence until the 24th, close on June 10th. FIRED UP!

The inspection came through and our GC is busy getting the items fixed. We are scheduled to close(FINALLY) on June 6th now instead of June 10th, the buyer moved the date up. Glad its happening on the 6th because we close on a nice 2.5 acre lot on the 10th, paying $20k through a wholesaler that contacted us about the deal. 1/3 acre lots are going for $30k in there now and I think this neighborhood is about to explode due to major road work, the outer loop for the city is very close and its going to be a GOOD thing! Excited about closing the new build, we went over time and over budget but we will still walk away with a nice chunk of money. I'll put the numbers up once it closes. Still looking for our first wholesale deal and the next flip!

Fired up! 1 and a wake up and we'll be closing on this project. Mama Knucks and I are ready to put this one behind us, take the lessons learned and profit and move to the next flip or new build. We got the HUD yesterday and everything looks good, over 40% on our money in 10 months, I can handle that, better then we would of done in the market. We have been driving for dollars and researching abandoned houses, hoping some can turn into wholesale deals, as well as buy and hold and another flip. Fired up about heading out to Arizona next week for more training by Dean, Matt, and others!

WOOHOOOOOOOOOOOOOOO! Just got word from the lawyers that we closed and its been recorded and we should have our funds in out account tonight or in the morning!

What a thread...you two have really brought up some key things in this experience and I appreciate it. Great job and good luck on your future projects!

Thx for sharing jack it is great, do give us the breakdown ok to hear how you did ok, ive got my 1st deal still working on my 2nd ive got to pick it up, making offers in KC & San Diego & wholesaling & got 3 under contract in KC the last couple of wks & they fell apart, title issues discouraging, buyers didnt want them they werent going to be able to get title ins on them is why, but going forward redbouble my efforts cant get discouraged gotta move forward.

THANKS to everyone who has commented and kept up with this project. Its been a long one with issues but in the end it turned out to be an incredible experience, some great growing and learning, and a NICE FAT check. It also got Mama Knucks more onboard with REI and in fact she is the one that pushed our next step with more training with Dean and Matt. See you at the bottom of Camelback Thursday morning at 5:45am Dean and Matt!

We had a 1/3 partner(they put in 1/3 and then get 1/3 of the profit) and also used a HML for 1/3(they put in 1/3 but only get their fees), and then our 1/3, so I'll explain the breakdown below. The numbers for this project look like this:

491500 Sale price
-5000 towards the buyers closing fees
-21000 closing fees
-104000 Initial purchase of house and wholesale fee
-8000 misc fees(power, gas, water, mowing, insurance, taxes)
-265382 knock down and build the new house(2900 sq ft, 4br/3.5 ba)
=88118 total profit

Here is how the split of the profit goes. The total profit split 3 ways, partner, hml and us. 88,118/3= 29,373, 1/3 goes to the partner, the hml gets his fees and we keep the rest(29,373 - 11,522(fees) = 17,851(ours)). His fees turned out to be $11,522, we borrowed $125k at 3 points and 13%. We used the HML last so we'd have less fees. So our 1/3 plus what was left from the 1/3 borrowed from the HML, gave us a nice check for over $47k. Daddy needs a new pair of shoes!

If you don't understand how I have this layed out or any questions, let me know. We close on 2.5 acres on Mon and are still not 100% sure what we are going to do with it. Keep an eye out for the posts on that next venture!

The deal is coming bro, just keep pounding it out and you'll have that deals flowing like Dean and Matt. Sweet that you are in other areas already. We need to pick it up ourselves and get our first wholesale. Its coming!