This is the 2nd article in a series in which I am chronicling my Real Estate Adventure. Previous article links for this series can be found at the end of the post. I have purchased a property that had been previously converted into 4 apartment units and need a total renovation. Follow along with me to find out if I have bitten off more than I can chew or will I realize my dreams of renting the apartments for a sizable monthly cash flow.
In the first post I discussed how I discovered the property, purchased, financed and Insured the property. Now the work and the spending begin.
During my initial inspections of the property I already knew I had an electrical issue in that two of the units needed breaker panels to be replaced as the existing ones were too small for modern appliances and amperage loads and they were the old fuse type panels. For those of you that are too young older panels instead of having breakers that flipped on and off like a switch they had fuses that screwed into each circuit. If a fuse blew you had to have a fuse of that size handy to replace it or, as many would do back then, is bypass the fuse by placing a copper penny behind the fuse. It was very dangerous thing to do because there was usually a reason the fuse was caused to blow in the first place and by doing so you just bypassed an important safety feature. I’m not sure that would work with the modern penny now days as they are not pure copper any longer.
Because I realized I could not do anything of importance on the apartments until I had electric service I had made arrangements with an electrical contractor for accomplishing the work. I knew this was the most important place to start. They actually contacted the real estate agent and made arrangements to check out the work prior to closing. They gave me an estimate for the work but also determined that in addition to what I already knew had to be done to bring it up to code I had to replace the feed wires for all the meters and breaker panels, install outside main cutoffs for each unit and because the new panels would not line up they had to change out the electrical service drops on the roof. Immediately after closing I went to the property and was surprised to see the electrical contractor there with the power company preparing to start the job. This was on a Monday after noon and by Wednesday evening they had completed the job. On Thursday the County Inspector showed up and inspected the work and then I was cleared to contact the Power Company to have the electric service activated. Unfortunately they were unable to come out until Friday morning so I didn’t have as much time as I would have liked to fully inspect the property. Most of the light fixtures did not have bulbs and with 9-10′ ceilings I could not reach them anyway so I had to buy a ladder and few packs of light bulbs (LED) from the hardware store.
I have decided to make every fixture and light in the apartments utilizing LED bulbs. It will give the apartments a more modern feel , save the tenants and myself money on electric bills and be a positive for the environment. In addition the bulbs should last 15-25 years so with less changing of bulbs I am hoping it will reduce damage to lighting fixtures. I have to say I put the bulbs on the front porch left them on and drove by at night and it made the outside look great at night.
Another quick job I had done was having a large Pine tree cut down in the front yard. The center of the yard is adorned by a magnificent Magnolia tree. It is very old and gives the home sort of a southern plantation feel. For what ever reason though there was a large Pine tree growing directly in front of it so I decided to have it removed. It took a couple of guys I hired about an hour to cut it down. There is a lot more that needs to be done in the yard but that will be saved for another time as I am still in the planning stages.
I had to head back to Virginia Saturday morning so my work for the week was over, although some what limited I do feel it was productive and I am happy with what I got done. Now that I am back at home I have to come up with a plan. My tentative plan is to start planning for the plumbing and Air Conditions.
My Budget for the first Unit is as follows:
Electric Panels Done – $5,000
Plumbing – $2,000 ( All supply side Plumbing, my son in law is doing the work)
AC – Already had some one check it out – 1 Unit is fine, 2 units need new electric, and one unit was (missing ?- stolen?) $3,500 quote to replace missing unit 2.5 ton
Demo – $600
Paint – (I’m doing the work ) – $600
Kitchen – $12,000
Bath – $3,000
Flooring – $2,500
Total Cost – $29,200 – Note: The Electric & Plumbing was for all four units so future units should come in cheaper.
What do you think ?
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