Another Great Month of Real Estate - November 2024
House Sold
Our latest single family house is sold! The dust hasn’t settled yet, but it looks like this will go down as our worst deal to date. Early estimates put us in $8000 in the red on a deal that had so much promise! Here is a short list of went wrong.
Bad Contract Management: I could easily say that the contractor on this project was horrible but horrible contractors are apart of the business. I personally failed by paying way too much upfront, not checking references, allowing him to purchase materials, and giving him the benefit of the doubt too many times.
Holding Costs: I estimated we would hold this project for 9 months assuming 6 months for the renovation and a 3-month lease up. While both of those numbers were very conservative, we ended holding the project for almost 20 months! I let too much time elapse before firing the contractor, then the project scope exploded when we pivoted to flipping the project, and lastly, high interest rates led to a very slow sales period.
Seller Concessions: I gave about $25,000 in seller concessions. These concessions included additional repairs, paying their agent, and paying a portion of their closing costs. I don’t regret this but that did eliminate my entire profit. It costs me $1000 to hold onto the property each month between the mortgage and the utility payments so I needed it gone regardless.
Emmy Tip: Review each project once you’re complete to capture your lessons learned. Put those lessons learned into an Excel document broken down by phase. This way you have a quick reference guide you can review when it comes to your next project.
Lots Under Contract
We have two lots under contract for our next new construction projects. I’m nervous but I firmly believe our destiny lies in new development. I don’t think we will ever feel 100% prepared but I do believe we have a great team in place.
We want to have our project plans solidified by the end of the year so stay tuned for that! The lots are a half acre each and we will most likely build 4 bed, 2+ bath houses on each lot. I’m excited for what we can do with the large lot in terms of added amenities for the home owner.
Emmy Tip: You need to have a rough idea of what you’ll build and how much you can sell it for before you buy your land because those numbers will dictate the max you can purchase the land for and still make a profit.
Unit Inspection
We do annual inspections on our units to catch issues before they become a problem. Water is the nemesis of buildings, especially in the Pacific Northwest where we get a lot of rain. Our inspections focus on water damage (both in the ceiling and in the bathrooms) as well as:
Appliances
Heating and cooling systems
Unauthorized pets (this can affect our insurance)
This round of inspections uncovered a slow roof leak that’s probably been slowly leaking for a few months. Luckily, we found the issue before it damaged any drywall and now we aren’t forced to make a quick and costly repair.
Our next steps are to get a few bids, select a contractor, and notify our tenants of the upcoming repairs.
Emmy Tip: Chimneys, skylights, bathroom exhaust vents, roof valleys, and any other roof protrusion are where the majority of roof issues originate. Pay special attention to these areas when you inspect your property.
