New Orleans-area investors Braden Smith and Chris Leniek are not afraid of much of anything in their unique real estate market, so taking on a two-bedroom/one-bath home in need of a near-total remodel was pretty much par for the course. “We buy run-down properties, fix them up, then sell them,” Smith explained. “My business partner (Leniek) is a contractor, so we’ll do just about anything.”
Smith, owner of REvitalize Property Solutions, and Leniek, owner of St. Croix Construction, are both licensed realtors in addition to real estate investors. Smith noted that they both view the license as an advantage when putting their projects on market. “We price these homes right to get them sold within the first month on market,” he observed.
In the case of this off-market property, however, the timeline was a little different than Smith had originally planned. “I got this property off-market from a local wholesaler, and we knew we were going to have to make big changes,” he recalled. The team added a bathroom, created a master suite, put in new wood floors throughout, repainted the exterior of the home and added a front porch, sidewalk, and sod. “We also redid the roof, the HVAC, the electrical and the plumbing,” Smith said. “It was pretty extensive, but most of our renovations are.”
Purchase Price: ~$150,000
Total Renovation Budget: ~$100,000
Timeline: Almost one year
Sales Price: $330,000
Estimated Profit: $80,000
- The investors used a private lender for this deal, putting 10 percent down and paying 10 percent interest and two points on the back end.
- Smith had to fire a contractor early in the process, which extended the duration of the project. Leniek “saved the day,” Smith said, “which led to our very good working relationship as well as a fruitful partnership.”
- Smith recommended investors considering fix-and-flips in the New Orleans market should look for projects that will take no more than three or four months and that can be priced to sell within the first month on market while still yielding a good return.
- Since its sale in late 2017, this property has gained roughly $16,000 in value according to Redfin.
Mortgage points, also known as “discount points,” are paid directly to the lender in exchange for a reduced interest rate. One mortgage point costs one percent of your mortgage amount.
“We learned a couple of important lessons with this deal, such as the fact that stucco houses can be a pain to deal with in our climate and tend to have more termite damage than others.
“We will also never leave any of the old plaster walls in place again. In this property, we replaced the plaster in some areas, but not all. It would have been much easier to just get it all out of there and go back in with new drywall.” – Braden Smith