Johnny gets his hammer
Remember John Dough? You met him on November 6. He bought a bank-owned property with the intention of finishing the renovation and selling it for profit. You heard about his private financing on November 18th. Now, John has a loan, he has a deed, he has a budget. He's picking up his hammer and getting to work.Here’s John in his own words:
Getting to Closing in One Piece: It’s been awhile since I last commented on our progress so here is an update. After we secured our financing we had about three weeks until closing. It was pretty uneventful. Title was clear, taxes were owed, and the water/sewer bill had to be paid. The bank owning the unit agreed to pay the taxes, but would only pay a 1/3 of the water/sewer. So we had to pay the balance, which wasn’t much ($400 or so) and we also had to insure the property which meant that we’d be paying for the share of the other condos in the building that were bank owned. That cost was about $1200 for a half year master insurance policy. We plan to recoup 2/3 of that cost when the banks try to sell their units. With all that going on, we closed about a week later than expected but we weren’t subject to the usual fees that banks invoke when you don’t close on time. We now owned the condo.
Renovation begins: As I mentioned in my earlier entries, the unit was already half renovated. So it had been gutted, re-wired, and re-plumbed. When we took over the unit had the sheetrock and plaster done, new doors installed, the HVAC system was installed, and 90% of the trim was done. Our budget was $49,250 to complete the unit. That doesn’t include any work in the common halls and exterior, which also needed some work. Our budget is listed below:
Carpentry $4000
Bathrooms $8000
Finish hvac $1500
Finish elec. $3750
Finish plumb. $3500
Wood floors $9000
Cabinets $6000
Counters $4000
Painting $3500
Knobs/pulls $1000
Appliances $5000
As we have been trying to order supplies and keep our timeline on track, we have noticed that with the credit crunch manufacturers aren’t making their products in great enough numbers so we have had delays getting flooring, vanity’s, door knobs, and lighting fixtures. We are probably 2-3 weeks behind schedule as a result of it. Next entry I’ll talk about how we did with our budget and our inability (thus far) to get refinanced. On a side note we have had a couple of showings with strong interest. Prospective buyers have been impressed with the quality of the finishes and the attention to detail. There isn’t much on the market that’s competing directly with us that can match our level of quality.
What do you think of John’s plan?
Are other builders seeing delays in getting construction materials? Is this a new side-effect of the economic downturn?
Comment
Permalink
Email
anyone know his all-in cost at closing? Purchase price, closing costs, other lien payoffs etc. ? I would like to track this to the penny.
I'm with Hung Wang.
What are John's monthly carrying costs: PITI, utilities?
How much did the attorney charge for the purchase and sale?
Is John using a realtor to sell? Has he factored a 5% commission into his expenses?
Hung + anti,
I don't think I'll be giving out my purchase price. Closing costs were about $2500. Other costs are mentioned above. There is no principle or interest payment each month. Our deal is we pay our investor back 10-20% interest on top of his initial buy-in at the conclusion of the project. Condo fee is $150 and taxes are probably around $230. My partner is a broker so we are planning for a 2.5-3% commission to a buyers agent.
I thought the whole point was to see if John Dough could succeed in this project?
Without a cost basis and other details, how will we know? Not trying to be a pain, I just want to follow this...
Hung,
If we succeed you'll get some more info. If we have to throw in the towel and rent the unit, I'll break down those numbers. But at this time I'm not giving out the purchase number. I might be willing to talk about price per square foot numbers we bought at, but I won't be giving out a square footage.
John, The purchase price is public record. Go to masslandrecords.com and you can look up the deed and mortgage. Withholding it here will not keep it from your potential buyers and their agent. I agree, I'd like to see the math.
But John, we need to know everything now this is the age of the internet darn it you cannot have secrets! (BTW I was just joking with that previous sentence) I can understand your reluctance to provide some of the more detailed info that has been requested. If you are interested in another condo north of the city almost in NH I would be happy to sell you mine in the spring without a broker! (Yes I am serious I would like to sell, but don't really expect you to jump at the offer you seem to have your hands full but if you are interested see if Rona can connect us via email).
Good luck John and you are smart not tp give out those numbers yet. Wait until it is all done and sold. Last thing you need is a buyer who walks into a price negotiation with a printout of your financial details he printed from boston.com!
Quick question to John and anyone else out there, is there room now to drive a good bargain with folks like kitchen counter dealers and installers? I'm thinking of replacing my counter tops (about $6000 or so) and I'd think that some places would be begging for business. Is this so?
Huang is right, without purchase price these articles are pointless. Risk can be distilled down to the leveraging of money, and we have nothing useful so far to see how much risk there is in this project.
John - I circulated your post around the company , and the general response was shock and awe. Some thought that this was a joke or a "How not to do it "but, I assured them that this was not a joke. Our best wishes are with you for success with this project ,and a quick recovery when it fails.
P.S. - They have created a name for your partner - Joe Blow
John, the 10-20% interest is a big range. How will this be pinned down?
longer than usual delays? I'd expect up to 6 weeks, which still seems pretty accurate
This blogger might want to review your comment before posting it.
Recent Posts
browse this blog
by categoryINside Boston.com
on the ice at Fenway Park