The Pilgrim rehab is entering the homestretch. Repairing the exterior was more labor intensive and took more time than anticipated. But the end is in sight and we expect we'll be marketing the property for a renter no later than the first of March. Here are a few of the latest progress pictures:
Completed Work:
Kitchen and bathroom tile floors complete
Kitchen cabinets and countertops install complete
Exterior paint nearly complete -- final touches on trim forth coming
Bathroom vanities purchased and delivered -- install forth coming
Master Bedroom LVP flooring installed
Enclosed covered storage; framed and installed doorway
Framed and installed new closet doors
Major To Do Items:
Refinish and stain hardwood floors
Kitchen:
Purchase and Install Appliances
Install Tile Backsplash
Bathrooms:
Install new bathroom vanities, fixtures, and toilets
Install Rear Patio Columns
Demolish 2-story storage unit
Replace two additional windows
Minor landscaping upgrades
As we approach completion of the rehab, we have considered different disposition strategies to include renting with a lease option, rental as a section 8 property, and finally, a traditional market rental.
A lease option (aka rent to own) is essentially where you rent the property to a tenant while also entering into a lease option agreement. With a lease option agreement, the tenant pays a non refundable option fee which gives them the option to purchase the property at the end of the lease period (ie 5 years) at an agreed upon price. This is attractive because the quality of tenants this attracts, the relatively long rental period, as well as the handsome lease option fee. (A tenant might want to enter into this type of agreement if they want to be a homeowner but maybe have some credit issues they are working through and can't qualify for financing at this time.) The downside is the possibility that the option buyer typically exercises the option about 30% of the time and will buy the property from you--we are looking to build a rental portfolio and the risk of having to sell the property should the renter exercise their option to purchase is not very attractive.
Renting via Section 8 can be a very attractive strategy for a property owner. Section 8 is a rental subsidy program funded by the Department of Housing and Urban Development (HUD) which pays for all of some of the tenant's rent. Section 8 is available to low-income, elderly, and disabled tenants and many make very good tenants. The current limit for rent for Section 8 in our zip code is $1507. We're looking for a minimum of $1600 a month so we'll keep this as a back up option.
So, we'll be attempting to go the traditional market rental route. We'll be advertising soon via Zillow and Craigslist as well as the standard yard sign at the property. We have zeroed in on our qualification criteria and will begin marketing shortly as the property nears completion.
Last update, we mentioned we were trying to acquire a 14-unit condominium project as part of a joint venture. Bad news was our offer was not accepted...good news was that we have solidified a relationship with an operator in the syndication space should the right opportunity present itself in the future. Shout out to the other teammates out there who were ready to jump on board.
Thanks for checking in--talk to y'all soon!