9/9/22 – Initial walkthrough completed by John Jones:
The property is a 4/2.5 and is located in a good location. The property was in overall solid condition but depending on what you want to do (retail v rental), the cost would look two different ways because there’s work you could do but wouldn’t have to do. For a more preservative approach that would have us retaining the kitchen, baths, flooring, painting the ext/int, installing a new condenser, and other misc items, you’d be looking at 25-30k (this INCLUDES the fee). If you wanted to redo everything and make it more modern, you’d be looking at 50-55k (this INCLUDES the fee). See the summary below.
Roof: The roof looked to be in good condition and has some life left in it. I think you’re good to keep it.
Exterior: The exterior was in overall solid condition although there was a crack in the slab foundation. We aren’t foundation experts but it appears to be from settling. Apart from that, the exterior could stand to be spruced up a bit with some pressure washing, siding replacement, painting, and other miscellaneous items.
Interior: The interior was in overall good condition. The flooring on the bottom level is stained concrete that you could keep along with cleaning and restretching the carpet on the upper level. Keeping those would be the more preservative approach but if you wanted to do something a little nicer that would be durable, you could get LVP installed on the lower level. Both full bathrooms are in good condition and could be kept as is. All of the bathrooms were in mostly good condition and would only need some light maintenance/repair work done to them. The kitchen also was in good shape and you really wouldn’t need to do anything to it.
Mechanical: The mechanical equipment downstairs looked to be in good shape and fairly new. The upstairs furnace is likely a little older but still seemed to be in good condition. It’s worth noting that the upstairs didn’t seem to be cooling as well as it could’ve, so we’d need to make sure all the ducting is run correctly and balanced. The condenser looked to be on the older side so you would potentially be looking at having that replaced.
Electrical: The property is on breakers.
Pictures: Walkthrough Inspection
Estimated Finished Sqft: 2,640
9/12/22 – Desk appraisal ordered, paid for $181.84, and received.
Opinion of value: $220,000 The appraiser said that the distance does not represent an issue. Due to the subject’s addition, which increased its square footage to 2647, it was necessary to go over 1/2 mile to find comparables with similar square footage. Yet, all 3 comps are still within 1 mile, which is typically what lenders like to see. Therefore the distance isn’t concerning, however, all 3 comps were on larger lot sizes, and for that, She did make an across the grid adjustment of -$10,000 to each comp due to their larger lot size. On the desktop appraisal forms, the adjustments are shown in the grid like on the full appraisal form, but she did make that adjustment. Aside from that, the 3 comps are still in the same market area, similar in age, condition and GLA (gross living area). Comps were limited with similar square footage.
Confirmed market rent: Start marketing at $2,195 and reduce to $1,995 if required; Pat said the property does not need granite or anything but needs to be nice.
10/6/22 – scheduled to close on 10/14/22. Bryan Carter is the transaction coordinator with Connect Home Buyers and he will be handling the transaction for us. Please complete the Memphis Closings module. Here is the Success List to keep us focused:
- Connect you with title: arrange mobile closing and get wire instructions
- Connect with Jennifer Spicer with Great River FCU: begin loan application
- Complete “new client” form for Rivertown Realty: professional property management team
- Connect you with insurance provider: insure new income property
10/12/22 – Insurance quote received and attached here. $1,290.61 annual premium feels high. They can bind as soon as I send them an email. We can setup online payment and recurring payment OR insurance can be escrowed with the refi loan. I am going to get another quote from our “umbrella” coverage provider. I will be CERTAIN that we have binding coverage before close on Friday 10/14.
10/13/22 – Selected Lipscomb Pitt Insurance. Invoice and Evidence of Insurance EOI attached. Current deductible is $2,500 and I am going to see how much the premium decreases by increasing the deductible. Jeremy, please pay the invoice in full with your credit card as soon as possible.
Need to get the executed Management Agreement and HUD to RiverTown as soon as possible. It is a bit of a process for them to get the utilities rolling with the city of Memphis sometimes.
10/20/22 – Finalized scope of work for rehab (attached) and received new quote for insurance (attached). Brett will reach out to Alicia Spicer Alicia.Spicer@libertymutual.com A Liberty Mutual Company, 6060 Poplar Ave STE 301, 901-691-1070 cell. Looking at changing coverage. Jenni Spicer gave us 4.49% at 1.5pts and would like to work with Lendserv title for all refinance closings. They will give us a discounted rate of $350 vs. $625 at Saddle Creek.
11/1/22 – Final confirmed SOW attached. Reno cost $33,490 to include replacing kitchen counter and upper level A/C unit. Also shared the typical repair list from Alicia Spicer to make certain the reno addresses any issues. Jeremy issued the wire and we should see the first draw request tomorrow for initial down payment. Work should start in the next day or so and should take approximately 2-4 weeks to complete. I will connect with Pat to make sure we get a tenant asap. The refinance should only be a couple weeks out as well.
11/11/22 – Reno Update – Week 1 – You’ll find the link to the progress photos below. We’re working on painting the interior and exterior and it’s mostly done. We’re also painting the cabinets in the bathroom and living room area. We’re also replacing the missing siding and will be installing the new fixtures, pulls/hinges, cleaning the carpet, and installing the countertops next week. Link to Photos
11/19/22 – Reno Update – Week 2 – You’ll find the link to the progress photos below. This one is coming along nicely! We’ve got exterior/interior painting done, pulls/hinges installed, light fixtures installed, and laundry exterior door installed. We’ll be installing the countertop, cleaning and stretching the carpet, and other miscellaneous items. We’re anticipating finishing everything out in another week. Link to Photos
12/6/22 – Reno Update – Complete – We’re all done with this one and you’ll find the link to the final photos below! There is one thing of note regarding the backside piece of siding we replaced. We painted it after we replaced it and it began raining very soon after so there’s some runoff. We’ll go back out after the rain subsides to give it another coat. Need to make a decision on the carpet. Link to Photos
12/12/22 – Property Update – Marketing for Lease – This property is officially being marketed for lease at $1,995/mo. December is historically a more challenging month to secure tenants but we are optimistic we have the price correct. The reno team exposed major stains in the carpet that was previously covered by the home owners’ furniture. The team did everything possible to remove the stains but were unsuccessful. It is best to replace all carpet in house now and replace it with luxury vinyl plank LVP rather then spending $2,000 to $3,000 replacing the carpet with carpet. Carpet will only last one to two tenants. LVP should last 10-15 tenants. We have elected to install the new LVP at an additional cost of $5,000. Please wire $5,000 for this additional work to Saddle Creek Title at your very first convenience today or tomorrow. The work will be completed immediately as we are marketing the property. I have updated the Deal Analyzer to reflect the actual numbers for your review. ANTICIPATED SCENARIO This is still a great deal!
12/19/22 – Property Update – Marketing for Lease – LVP flooring install complete. Appraisal site visit completed today. Link to Photos
12/27/22 – Property Update – Heather from GRFCU let me know she is waiting for the completed site visit report and will be pushing this to underwriting. Property is currently marketed and the activity feels good especially this time of year. Weather has slowed things down this past week. No applications yet. A/C condenser unit is to be installed when new tenant is secured and moved in. Construction team has been paid and unit has been acquired.
12/27/22 – Property Update – Congrats!!! The property just appraised $17,000 higher than our conservative ARV officially at $237,000. Actual appraisal is attached here.
1/16/23 – Property Update – Congrats!!! This property is officially leased up and your first property is officially stabilized with positive cash flow! We have executed a two year lease at $1,995/mo, have collected ALL monies due, and the tenant has moved in. The tenant is no longer asking for the fridge and stove to be updated. We have also initiated the final HVAC work to be completed as well.
1/23/23 – Property Update – Tenant only signed a one year lease because we did not update the fridge and stove. This is actually helpful for us as it give us the ability to increase the rent when they want to resign. Received I have a bit of untimely news. We’ve had an overrun for the HVAC on this one. The cost of the material has gone up significantly and my tech found that an extra line set was needed to modify the new unit for installation. The overrun amount is $1250 and that is for the cost of the condenser, line set, and labor for running the line set. I am reallocating $1,250 from the 4437 Hodge escrow account. We still have sufficient contingency funds in that account to cover the pluming issues. All we need on this are the final two docs to get the refi closed this month!!!