We have an investor who is interested in purchasing 3 properties from us – Bigger St, Crane Pl and Nebraska Avenue. Crane Pl is ready and rented out so we are moving ahead with that property and we will be starting rehab of Nebraska Avenue project next month so that one won’t be ready for closing until sometime in March.
The investor really likes the Bigger St property because of the neighborhood it’s in and the size of the project. The other two properties that he will be purchasing happen to have more than one bathroom – Crane is 4 bed/2 bath and Nebraska is 3 bed/1.5 bath. The buyer would really like to purchase properties with more than 1 bathroom in them and that was the hold up on Bigger St property. So I had our Project Manager, Maria, do a walk-through of the house with our contractor, Jaime, to see if there is a possibility to add another bathroom in Bigger St property.
Luckily, Bigger St property is “bigger” than our typical property so initially we were thinking of just putting another ½ bath but between Maria and Jaime they were able to come up with some great ideas and we will be able to add a full bath in the house with a shower.
I spoke with the buyer last night and explained him what we will be doing and he is happy with the decision to put another bathroom. He understands that the price is going to go up because of the additional bathroom, but I do believe it is a good decision in the long-term because of higher rental he will receive right now and added value to the property.
The investor was going back and forth between whether to add the bathroom now or add it at a later point between tenants but he and I discussed the pros and cons of adding the bathroom now:
- Additional cost
- Slight delay in closing
- Added value to the property
- Higher rent
- Cost of the bathroom will now be rolled into the mortgage rather than the buyer having to pay it out of pocket in cash later on
I think 3rd point above was critical because if he were to add a bathroom at a later stage on his own, he would have paid the entire cost of the bathroom in cash out of pocket but by getting it done before closing, the additional cost becomes part of the purchase price and he is essentially paying 20% of the additional price for the bathroom now out of pocket and rest will be paid down monthly as part of mortgage.
So ended up buying win-win situation for both parties involved. The investor is happy with the decision which is our # 1 goal.