Anyone Here Do High End Rehabs
Not to suggest your work isn't top quality for your area, but I'm referring to cost/time - e.g., I am working on deals where I can buy for around 500-700K and resell for 1.4mm-2.0mm after about 400k-800k of work after 3-6 months.
Would be interested in anyone's (or anyone you know) experience - getting banks over the ARV hurdle, sources for competent contractors, how it differs from smaller jobs (besides the obvious concentration of risk).
Think it's better to try and turn 5 smaller starter type homes at a time?
In metro boston (or CT coast) 1.5mm+ post reno is just above median price for some towns and the people are just trading up appreciated assets out of their starter homes as their career takes off 6-10 yrs out of med/law/biz/etc school, so it's not like Shaq is going to live there. Granite and sub-zs are de riguer however
My only comment would be that to "force appreciation" on a sfd can be a risky proposition.
I have tried it in the 200/350K level and have had a terrible time trying to unload the property. Seems, that only after the rehab was done, the "neighborhood" becomes an issue. Far too many REA's know what the house sold for before and can't get beyond the stigma of that.
Dave
It is common here in LaLa land and I am looking at several at this instant that are in foreclosure right at completion or shortly thereafterwards. Seems that in the original investment they forgot about carry time.
I looked at one the other day in the hills of Sherman Oaks. He bought this dump which was built in 1947 when Calif was just experiencing the bad galvanized water pipes from Japan that popped like a Piano out of tune. The supply lines had so many clamps on them you could almost pay for the copper conversion by selling the clamps. The way back in time builder had put in what purported to be a French drain back of his retaining walls. Turned out to be a German drain. You know Maginot lines on either end so it pops in the middle and the walls begin to want to embrace the house. Well the nice builder man from Israel did a really geat job. Highly polished wood floors nicely attached along the edges and nowhere in the middle. Gives you a floating sensation as you walk thru the house. In Japan I think they call it a Nightingale Floor, it creaks and at night while you are being robbed you can listen to the bad mans footsteps through the house.
But the place has a view. Oh my god you think you are the Final Approach to Van Nuys Air Port. I have an overwhealming desire to drop the flaps and wheels. Cheap but well done.
In any case the builder could not carry. It is loaded with two loans which total upward of $550,000 and the market is at $650,000 to $850,000. This is not an inspired architectual statement suitable for the high side but it fits the down side.
So I am talking to the bank. Want to either assume their position and get them to clean up with the foreclosure but except a lower bid. To accomplish this I want their Trustee to allow me if needed to postpone the sale after the Calling of the Sale, two times. I can then see what the hot foreclosures upcoming are that are being conducted elsewhere and then rescheduled the sale for that day, thus insuring my bid is da big winner. I know I know but I do like to have my bids accepted. Have you ever returned to your bank after a looser of a day and hand in all those cashier checks and have the bank manager sneer at you. I grovel well but sneers do bother me. He went to some local Junior College and is drunk with power. Has elevated his desk chair so he has that crucial four inch elevation over you sitting in front of him on the otherside of the desk. I am always tempted to make rude noises. But I control myself. His Secretary is Japanese so we always bow to each other and she always says in Japanese. "Oh so sorry that you are here to see the White Hairy Monkey with the blemished soul and manners." If he only knew.
Helpfull I hope so. Cheers Lucius
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Seems, that only after the rehab was done, the "neighborhood" becomes an issue...you mean that after the rehab is completed that the neighborhood and what it can carry are called into question?
I tie the property up and try to get all the docs over to the bank before closing so I have a sense of what can be done. If they write up the ARV, great, if not, I flip after doing lower end work. Can be risky b/c getting hte architects/engineers plans and having the bank look at them quickly for ARV basis can be quite hard. By doing that you're really trying to remove all risk from the situation. Extreme local market knowledge is a big help. Giving them some comps/ ideas can help though some banks view this as 'pushy'