Kim Jones Rehab Deal

Rehab Details

Property City: Toronto
Purchase Price: $270,000
Repair Costs $86,000
Holding Costs: $29,650
Sale Price: $540,000

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Case Study

How did you find and structure the financing of this deal?

The deal was referred to us by a lawyer within our network. The seller had experienced some life events which made it difficult for her to take care of her home and she was facing foreclosure. Her brothers were appointed Power of Attorney. The interior of the condo had been neglected for many years allowing for greater negotiating leverage. The urgency of the pending foreclosure and the emotional element of the situation helped with negotiations. The brothers were struggling to deal with the situation and were emotionally invested trying to take care of their sister’s best interest. We offered for them to take only what they needed and leave the rest for us to clear out and we also offered 20% of our net profits to help them financially when we sold the condo. 100% of the purchase price ($270,000 + $60,000 for rehab/interest/closing costs) was by provided by a PML thru a mortgage broker and $65,000 gap funding was provided by friends and family at 10% interest. Remaining was funded by credit cards and Interest payments were prepaid for the one year mortgage.


Provide a summary of the repairs and improvements you made to the property.

Because the deal was a condo unit, we were limited to only renovating the interior of the property. We did clean up the overgrown 'exclusive use' backyard for the unit and paint the entry door. The home had a very bad odor, so we removed all of the bathroom and kitchen fixtures, and all of the flooring. New dry wall was hung over the 'popcorn' ceilings. Non-load bearing walls were removed to open up the extremely tiny kitchen and make it full size kitchen with a breakfast bar. Sleek fixtures were installed in the bathroom after the plumbers moved the plumbing for the toilet in attempts to make a small bathroom feel bigger. The walls were treated to eliminate the odor in the home. All new flooring and doors were installed throughout the unit to give it a more modern feel.


How did you find a buyer for the property if you sold it?

We listed the condo for sale on the MLS with an agent. The agent ran kijiji / craigslist ads, and held open houses. We also ran Facebook ads promoting the open house events on our business Facebook page.


What are some of the major lessons learned that you would like to share with other students that they can learn from?

There was a misunderstanding with the prepayment of interest on the “mortgage” which forced us to reach out to family and friends immediately to fill the gap for the renovation process. The renovation company subcontracted all of the work out right from the beginning. Only when we ran into issues with work not being completed, they brought in their own guys to finish the work. rnThe home had a bad odor and had heavy nicotine staining. The walls were not prepped for the painters properly by the contractors. We ultimately had some issues with the texture of walls and paint adhering to the walls.The floor in the kitchen was not level at the time of flooring installation which subsequently caused the laminate flooring to fail in certain areas three times before the project was completed. Even though we provided a lock box on site, the key was not always put back by the subs. Because it is a condo with limited space, we opted not to provide a dumpster for garbage and required it be contained or removed daily, and often the site was left a complete mess. We learned to ask more questions when hiring a company to complete the renovations and if they will be using sub-contactors. We learned to ask for more clarification when securing a mortgage because the mortgage broker told us want he needed to tell us to get us to sign. We learned that even project managers need to be managed!


Shout Outs & Testimonials

Fortune Builders (the coaches and the network) gave us the confidence to move forward and get started in Real Estate Investing. We had a coaching call with Guylaine Parthenais just after we closed on the property and she was an amazing voice of reason and calm when we were faced with the hiccups with the money lender. She gave us a lot of great ideas on how to handle things and move forward with the project. We want to thank fellow Mastery student Steve Wilson. When we were presented with this deal, we were on our way back from the Washington Bootcamp and needed to reach out to someone to help us with comps. We gave Steve a call, and he not only helped us out with the comps, but also joined us when we met with the Power of Attorneys for the seller. When the project was nearing completion, we reached back out to Steve to have him sell the project for us. And we want to thank Dawn Fisher, another Mastery Student. We asked Dawn to stage the condo for us! Her talent for design made the place look amazing! (We wanted to move in!)




Before & After Photos