My last update was early July, and am finally getting to my fourth update late September. Let me catch you up on where this rehab stands at this point.
First, it should be about 2-3 weeks from being finished. That is about three weeks behind schedule, but if you want to buy a rental home and rehab it, the schedule always moves. The buyers market has picked up in this area, and that means laborers are hard to find or are scheduled further out than normal.
All floors have been installed, kitchen cabinets installed, and am waiting for the countertop that was supposed to start today…but of course, is moved until tomorrow. Plumbing needs to be finished along with lighting, but finding an available painter has been an issue. I did get the outside of the home painted, but that painter was scheduled out on other projects for several weeks backing up my timeline for inside paint. Today I might have found someone that can complete this task next week. Once inside paint is done, then plumbing and lighting can finish leaving just small tasks to be completed.
Let’s review the cost outline, which includes all construction, painting, and equipment. The home purchase was for $510,000, which was a deal for this market. I took advantage of COVID uncertainty, but only two weeks after this purchase, home sales when nuts in the area…so good timing! I am currently at $60,000 on rehab costs putting me at $570,000. That is just passing my high-end budget, but again I was prepared for this because I have done this before! Costs never come in lower than you expect…that is very important to remember!
At this point in the project, I am now researching what to do with the home. I have four options as follows: Sell it. Long term rent. Airbnb it. Have a rental company rent it. My original goal was to hold the property, and long term rent it out. But of course, things change and doing some of my research the following has been discovered. If I was to sell it I could probably get $720,000 right now. Again it’s a very strong market and would be an easy flip. If I rent it long terms I should be able to get $3500 a month which would bring $42,000 a year. Now doing vacation rental is my last option, and I am currently having a couple of companies give me estimates. To do the short term rental I would then have to invest in furniture plus internet and electricity/water. So that all has to be taken into account…and the numbers will tell me which is the best option.
Personally, holding the property is always the best bet because real estate always goes up over time. And with this mountain vacation location, this market is always popular. Part 5 of this blog will explain my final decisions.