Rehab #8, Wenham – Under Contract


My partner and I got our next property under contract back in August.  He found this deal on the MLS.  It was originally listed for $240,000 and after several price reductions it was listed at $199,900.  We offered $140,000 and after some negotiating, we’re under contract to buy it for $146,000.   We are scheduled to close on Sept. 11th.  Neither my partner nor I have invested in Wenham before but we are familiar with the town and know it’s one of the most sought after areas in northern Massachusetts.  Wenham is about an hour drive from my house so I’m hoping I don’t have to drive out there all that much.  Here are the preliminary numbers for this project, brief description of the rehab and pictures.

Rehab #8 Rehab Analysis

This house needs a full cosmetic rehab, floor plan reconfiguration and some minor structural support.  Also, the 2nd floor is pretty small so we are planning to add a 120 sq.ft. addition over the 1st floor (above the left side of the house) to create a large master bedroom.  This is by far the biggest project that my partner and I have done together so we hope it goes smoothly.  We are estimating that it’s going to take about 3 months to complete.  We are being a bit conservative with the timeline because we are using some new contractors and anticipate some unforeseen issues as we open up the walls.

We are going into this project as a cash deal but we may decide to pull some money from my line of credit depending on future deals and our cash flow situation.  I analyzed this deal with the assumption that we will use cash for the purchase and the LOC for the rehab and holding costs.

This house was difficult to comp out because there were limited properties sold in the last 6 months.  Also, there were no sold homes that were completely remodeled so we are likely going to set a new high for sale price in the area.  We aren’t too concerned about the sales price though because although we are estimating an ARV (after repair value) of $350,000, the median sold home price in the town is $425,000.  The location of this property isn’t in the best area of the town, hence the price difference.

Here are some preliminary AutoCad drawings of the existing and proposed floor plans.  I’m sure there will be more changes as we get closer to closing and refine the layout with our contractors.

Existing Floor Plan

Existing Floor Plan

Proposed Floor Plan

Proposed Floor Plan

Here are some before pictures of the house.  I’ll have to get some pictures of the second floor before we start renovating because it’s going to be a dramatic change.


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  • I like spreadsheets. Spent way to much time figuring out what cell was pulling what. 🙂

    If I am reading this right you would be paying all cash for the purchase and then only possibly utilizing the LOC for rehab and holding costs afterwards?

    Also I assume your partner is an agent (I don’t think you are) since I saw you guys got a buy side commission on the purchase and only looking at the buyers side on resale.
    Are they a broker or do you need to add in a tad more to cover the broker split on the sell side?

    • Thanks Shaun. I’m thinking about providing the rehab analysis in my resources page so hopefully you won’t need to spend much more time figuring it out. Most everything in the spreadsheet is formula driven so I only need to input about 3-4 numbers. It’s been working great for me so far.

      Yes, that is correct. This is a cash deal on the purchase and we will likely be using our LOC for the rehab and holding costs.

      Yes, my partner is a real estate agent. I’m not sure of the agreement he has with the broker but I know we don’t need to split these commissions with him.

      • It is a pretty good spreadsheet.
        A few things mostly around the rehab cost number took a few minute to figure out what cells were pulling to that but made sense after I figured it out.

        Does your partner do a lot of volume? Pretty common situation is having an annual cap on revenue they bring in at which point they get to keep 100% so giving it is late in the year they might have exceeded that already. You also often see getting a 100% split if you are a principle but I think that is usually only on a primary, it is pretty cool if they do it on any property they have an ownership interest in.

        • The rehab numbers are pulling from a another tab that itemizes every cost of the project. I’ll make the spreadsheet available in the next couple of weeks.

          Yes, he does a lot of volume.

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