Chicopee talk ss


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The Good, the Bad and the Ugly of my first rehab deal. Learn what I did right what I did wrong and how you can make money in real estate even when you make some mistake.
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Chicopee talk ss

  1. 1. 619 Broadway St. Chicopee, MA The Good, the Bad and the Ugly of a First Rehab Project Shaun M. Reilly Copyright - Reilly Real Estate, LLC
  2. 2. Alternate Title “Wait, where the F@*% is Chicopee???” Copyright - Reilly Real Estate, LLC
  3. 3. Who am I? Raisedin Dracut, MA Graduated from Boston University 2000 – Bachelors in Math and Chemistry and Physics Minor Graduated from Boston College 2007 – MBA with focus on Operations and Finance – MSF (Master of Finance) Started in real estate March 2007 Full time since Jan 2010 Copyright - Reilly Real Estate, LLC
  4. 4. My Start in Real Estate Converted primary residence to rental in 2007 Quickly purchased 2 similar properties to use as rentals (Just the like they say in the books!) – Liked people mailing us money every month – Cashflow was not great  Overestimated rents, underestimated expenses Got in a holding pattern for a few years Copyright - Reilly Real Estate, LLC
  5. 5. How do you buy a house?MAKE OFFERS! InMay 2011 something “clicked” and I started making tons of offers. Conservative ARVs and High Rehab Budgets – MAO = 65% ARV – Rehab (Including 6 months of holding costs)  First offer 90% of this Be embarrassed by your offers! Copyright - Reilly Real Estate, LLC
  6. 6. How do you buy a house?MAKE OFFERS! 619 Broadway listed at $63,000 – Originally listed for $90,000 – 138 DOM when accepted  Plus 20 more unlisted days in middle Made 2 offers (the ONLY 2 offers) – Accepted offer of $34,535 Purchased for 54.8% of list (38.4% of original) Copyright - Reilly Real Estate, LLC
  7. 7. First Wholesale Deal??? Chicopee is really far away! I’ve never done a project! – Something that far away isn’t a good one to start with! Don’t know any contractors out there. Don’t have a network out that way. – Who can I hire? How can I find them? No way to utilize the network I had built out here.I should just wholesale it!!!!! Copyright - Reilly Real Estate, LLC
  8. 8. First Wholesale Deal??? MARKET IT!!!! Bring it to the REIAs! – MA REIA – Springfield shut done a couple months before – MA REIA – Worcester shut done that month Craigslist– A few responses but nobody serious Call the “We Buy Houses” investors out there – No call backs! Referrals – One serious buyer! Copyright - Reilly Real Estate, LLC
  9. 9. Wholesale Gone Bad… Buyer signed P&S and put down deposit Met with a Realtor and Contractor to get opinions on ARV and Rehab costs Lined up hard money and was going to double close on my contract date HML got cold feet and pulled out 2 days before Tried to salvage deal but nothing panned out Copyright - Reilly Real Estate, LLC
  10. 10. Can I Rehab It? Had the money to close Was able to get the money for the rehab work – Nobody I knew wanted to lend that far away Convinced a contractor I was working with evaluating properties to go there from Lowell! Had a couple of Realtor contacts that worked out there. Copyright - Reilly Real Estate, LLC
  11. 11. BEFORE Copyright - Reilly Real Estate, LLC
  12. 12. Quick Scope New Electrical New plumbing – Including new boiler and hot water heater Full Kitchen remodel with layout change Full Bathroom remodel with layout change New roof over back addition All new flooring, paint and fixtures throughout Copyright - Reilly Real Estate, LLC
  13. 13. AFTER Copyright - Reilly Real Estate, LLC
  14. 14. You Make Your Money When You BUY! Purchased just over 50% of list price Other Profit Centers – 3% closing cost credit – Buyer agent commission Purchased for ~10% less than MAO Cheapest sale of the year in the city (On MLS) – Last sale for less was 7/21/10 – No sale for less since Copyright - Reilly Real Estate, LLC
  15. 15. Financials Expense: Income:Buy Price $34,535.00 Buyer Agent Commission $828.84Settlement Fees (BUY) $231.95 Forfeited Deposit $500.00Construction $41,286.84 Sale Price $123,000.00Taxes $582.68 TOTAL INCOME: $124,328.84Insurance $1,196.79Utilities $573.48Miscellaneous $249.55 Had a $1,036.05 concession on purchase Buyer had a $2,500 creditCommissions $6,627.50Settlement Fees (SELL) $4,060.88 5.5% Commission on Net $120,500TOTAL EXPENSES: $89,344.67Gross Profit: $34,984.17 Copyright - Reilly Real Estate, LLC
  16. 16. Mistakes I Made Didn’t have a great exit strategy – Wanted to wholesale when I didn’t know how to wholesale! Overestimated ARV – Ran MLS comps that looked good – Local Realtors thought I was on the high side  Didn’t get this information until after purchase  Still thought I was in right range – Sold for over $15K less than the low end of my range Copyright - Reilly Real Estate, LLC
  17. 17. What I Did Right Bought really well Had a backup strategy when initial exit strategy didn’t work Overestimated Rehab costs – Everything is broken until someone tells me it isn’t Builtstrong relationships so contractor traveled for my job Was not dumb enough to think I should save ~3% by listing myself Copyright - Reilly Real Estate, LLC
  18. 18. Postscript to the Story Since then I have bought, rehabbed and sold 3 other houses Have 1 under contract for resale Have 2 on the market for resale 2 projects under renovation 0 under contract for purchase – Closed on one yesterday Copyright - Reilly Real Estate, LLC
  19. 19. Postscript to the Story Have now wholesaled a property Have added 2 units to rental portfolio – Should add 2 more by end of the year Have made over 1,300 offers on over 300 unique properties in 2012 – Over 2,000 and 400 since May 2011A current investor recently said they want to invest an additional $100K or more by January Copyright - Reilly Real Estate, LLC
  20. 20. Two Kinds of Real Estate Investors1. Those that make a ton of money2. Those that give up too soon Copyright - Reilly Real Estate, LLC