Have you ever found an unexpected repair during your rehab?
Well, here is what happened to Suzanne Hunn on her latest rehab project. It just goes to show you why you need a contingency fund when you are figuring your rehab budgets.
Hi everyone. Its Suzanne with FasterFunds Lending, today we’re actually walking through a house that I actually just closed last week.
So, I’m a lender by day, but I like to do a couple rehabs and work on some rentals throughout the year too. Just so I stay in tune and know what to look for when I’m walking through houses with you all.
So, this house is over in St. Charles County, and actually it’s like 15 minutes from our office in New Town.
And when I bought this house I was with the seller and he was really motivated to offload the property. He had inherited it and just really wanted it gone, but also wanted to make a fair price
so, he can put it in the trust and help pay off some debt that his family had.
So, we walked through it more quickly than normal and now that we’ve been able to close on it and really dive in and start putting our numbers together. We’re walking through this room that actually just comes off the kitchen.
It’s one of those layouts where you have the kitchen and then you have a step down into this but it’s not an addition like some people would think. So, when I saw this room, I’m standing up top in the kitchen and thought it looks like a basic room.
You see behind me there is a standard fireplace, but as I was here yesterday with my contractor walking through numbers. Well, actually follow me. We came closer and as we walked over and you can see that it’s actually pulling away from the wall.
So, there’s actually a really big gap that you can see that brick is just completely pulling away from the wall. So, I naturally thought well what causes that? Was just poor construction, but as I was walking down closer to the fireplace, you can actually feel the flooring kind of dip down and slope.
And to be honest with you all. I’m not sure what I’m going to do about that to fix that until we rip up this carpet. But there’s no foundation under here like that was just poured concrete.
So, we’ll figure that out. But we were brainstorming on it.
Okay, what do we do with this fireplace? Do we rebuild it?
We’re going to have this issue with this for that’s kind of dipped.
We’ve decided for this house in this price range, the best thing to do is just tear down all the brick. We’re actually going to cap the gas vent. It’s a gas fireplace and gas hookups and we’re just going to eliminate the fireplace from this room because we thought that would make the most sense.
But when you’re going through houses make sure … especially when you’re meeting with a seller that you don’t get caught up in talking to them that you forget to look more closely at fireplaces or other detailed things that could have some issues.
Thankfully on something like this, I always, always, always, budget some kind of contingency.
So, I know that when I walk your house, especially when you’re walking through quickly with a seller you cannot get back in and again. I always put in at least $5,000 buffer for anything I’ve missed on house.
That’s the size, it’s about 1,800 square foot home, so I actually should have put a $7,000 contingency budget for anything that would go over so we’re covered.
But that’s always a reason why we always emphasize to borrowers to make sure you have contingency money.
Make sure you have some cash in the bank in case your rehab money can’t cover everything because you never know what unknowns are going to come up once you really get into a house and start digging around uncovering some things.
So, that’s our tip for the day and we hope you keep following us on Facebook. Our Facebook page is FasterFunds Lending.
If you have any questions about how our lending program works. Feel free to give us a call at (636) 223-4262. Thanks.