Countdown to closing
Only four more days until we close on the single-family on Connecticut. I have arranged for the utilities to be switched over or turned on; the roof work, window replacement and hardwood refinishing have been setup; and I find myself growing impatient. I always look forward to closing deals (who doesn’t look forward to a paycheck), but this time things are different. My work is usually done when the deal is closed. In this case, at close, my work will only just be starting.
I keep milling over numbers and considering our different options, but at this point I am just going over things that are already done. I’m just ready to get my hands dirty and start making some progress. After all, the sooner we finish construction, the sooner we can put the property on the market. I’m quite confident in this project regardless of the cloud put over the market by the fear-mongering media.
The comps and continued sales of quality housing in Tower Grove South just don’t lie. Three similar properties have sold on this very block in the last year. The final sales prices of these properties were $109,000, $118,000 and $160,000. On top of that, the property that sold for $118,000 was a sister building to our project and it sold in inferior condition to what our finished product. There will be quite a nice profit margin in the end. Consider the following costs:
- $45,000 – purchase price
- $3,000 – closing costs
- $25,000 – projected construction costs
- $3,000 – 6 months holding costs
- $6,000 – cost of sale
Tallied up, we project a total of $82,000 will be tied up in the building in the end. And that’s a high estimate. Of course there will be some significant sweat equity too, but I don’t mind that. Currently, our target sale price for the finished project is $120,000. That could change, depending on a variety of factors, but if we manage to pull everything off as expected we would end up with a total profit of $38,000. Not a bad trade-off for losing a couple months worth of weekends.
Even if things don’t turn out as well as expected we will still make a nice profit. And if the bottom falls out of the market in the next couple of months, we will just rent the house for a while. We get a lot of demand for nice rental houses in South City through my office so I am not worried about that angle. I feel justified, I feel prepared, I feel ready. Now if only Wednesday would get here.