Foundation House
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10/4/21
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Foundation – Launch Complete
LAUNCH COMPLETE
Foundation House has officially made it through all of the stages of launch. What does that mean? It means we successfully fundraised the necessary funds, purchased the property, fully rehabbed the property, transitioned a refugee family into the property, and refinanced the property to complete our financing.
From here onward, Foundation House will be used to house refugee families and the profits will be used to fuel the gospel abroad. Indefinitely!
We want to thank each of you who played some part in the process, from providing funding to purchasing furniture, to setting up and decorating the house. You are all amazing and we are so grateful to be able to partner with you in this work.
News from the Family
The family from Afghanistan is doing well and settling nicely. The husband is in the process of obtaining clearances for a government job and the kids are in school nearby. They are very grateful for a home after a significant period of instability before their arrival.
A few more updates
We were fortunate enough that a friend of Compound Impact was able to donate a perfectly good washer and dryer set, which was soon installed in the basement. The washer and dryer was one of the family’s most frequent questions, so we were delighted to be able to get the units in safely!
What’s Next?
Now that the refinance is complete and the house has a stable mortgage, we’re excited to get to the point where we can begin using the profits to support other organizations working abroad. Before we get there, it’s important that we set aside an appropriate amount of rental income for emergencies and future maintenance. The good news is we’re not far from that goal! Once we reach that target, 100% of profits will be channeled to fuel the gospel.
Foundation – Finishing Touches
Finishing Touches
We mentioned earlier that a refugee family had moved in just a few weeks ago. At the time, we didn’t share any information about the family to protect their privacy. However, after clearing things with our resettlement agency, NSC, we are happy to be able to report that the family arrived from Afghanistan and that they have 3 children. They also have fair English proficiency. As we have mentioned before, we specifically target 3 bedroom homes in order to accomodate families with kids, and we are happy to have our family settled after their long journey.
We mentioned earlier that we are working on refinancing the property in order to get a mortgage in place so that we can pay off the short term loan we used to purchase the property in cash. When we refinance the house, whichever bank we use will ultimately have to order an official appraisal of the house to determine how much it is worth.
Well, we won’t be able to get an appraisal until 100% of the rehab is complete and we are waiting on 2 final items. The first item is a replacement for the bilco door at the back of the house. It is rotted through and needs to be replaced, but the size was not standard, so we had to order a custom door which was backordered. We are hoping to have the door delivered and installed in mid-November.
The second item is a new washer and dryer set. The house did not come with either, so we will be ordering a new set. However, the only way to get them into the basement is … yep, you guessed it. The bilco door.
Once the door is installed and the washer/dryer units delivered, we’ll be ready for our appraisal. In the meantime, we are working diligently with our loan officer to get all documentation in order so the only remaining item is the appraisal.
What’s Next?
Once the bilco door is replaced and the washer and dryer are installed, we’ll be ready for our appraisal. The appraisal is the last step to the refinance. Once the house is officially refinanced, we’ll be able to get things on a bit of an autopilot as the family continues to settle and we begin to put some of the rental income aside as cash reserves for routine maintenance and repairs.
Foundation – Family Arrival
<< October 12, 2021 >>
Family Arrival
We are pleased to announce that our first impact home family is officially moved in! The family arrived several days ago and is settling into their new home. We are so grateful for all of those who contributed to getting Foundation House launched. While there are still a couple steps to wrap up, the most important step is behind us – moving in a refugee family in need of safe, accessible, and fair housing.
And for those of you wondering… the boiler was installed without an issue.
What’s Next?
You might think we’re all wrapped up, but there is one more important step! Remember back in July when we mentioned that only 25% of the cash needed to purchase and rehab the property needs to be fundraised? Well that is because we use some special financing to get access to short term funds that allow us to purchase the property with cash. Now that the property is fully rehabbed and rented, we need to refinance the property by opening a mortgage.
Why get a mortgage now? If we had gotten a mortgage when we first purchased the property, then we would have been able to get a loan for 75-80% of the purchase price of the house. That means we would have had to put down 20-25% of the purchase price in cash as a down payment. Afterwards, however, we would have had to pay for all of the upgrades and repairs in cash.
The $18,000-$20,000 in repairs and upgrades, however, have now raised the value of the home by at least that amount. So when we refinance and open a mortgage on the property now, we will be able to get a loan for 75-80% of the new home value. This value is called the after repair value (or ARV) and is significantly higher than the initial purchase price of the property.
When we open the mortgage, the bank will give us cash for the value of the mortgage. And this cash will allow us to pay off the initial short term loan we opened to make a cash offer on the property.
Confused yet? If so, don’t worry about it. Just know that by waiting until now to get the mortgage, we will have saved over $10,000 for a fully refurbished house. And that savings gets us that much closer to the next impact home.
Foundation – Furniture & Supplies
<< October 4, 2021 >>
Furniture & Supplies
An enormous number of boxes showed up today as Liberti Church Riverwards furnished Foundation House from top to bottom. A wonderful team of volunteers helped assemble furniture, unpack Amazon boxes, and haul out an incredible amount of cardboard. Check out some of the pictures in the gallery below.
What’s Next?
The boiler is expected to be installed soon and the family is ready to move-in. At this point, we’re not far from the finish line!
Foundation – Expect Hiccups
<< October 1, 2021 >>
Expect Hiccups
In any real estate project there are hiccups. You just don’t know which ones they will be or when they will show up. The biggest hiccup in the process so far happened the day before move-in when the boiler experienced a major malfunction. As a result, it looks like we will most likely have to replace the boiler, which could delay move-in for a few days. Boilers heat water which is circulated through radiators in the house in order to provide heat. For this reason, having a working boiler is an important prerequisite to the family moving in.
NSC has identified a family and they will fortunately be able to remain in temporary housing for a few days while some of these issues are worked out. For the privacy of the family, we can’t share specific information.
In better news, just about all the remainder of the work is complete at this point. The pavers in the backyard have been resettled. Appliances have been delivered. The bathroom exhaust fan is installed and the roof has been inspected and repaired.
We have also received word that Liberti Church was able to complete their list of furnishings and supplies so the family will have a fresh start when they arrive.
What’s Next?
Liberti Church will be moving in all furniture and supplies in the next few days. The boiler should be replaced shortly and we hope to have our first family moved in soon after!
Foundation – Work Underway
<< September 15, 2021 >>
Work UNDERWAY
A number of rehab items have already been completed, but there is plenty more to do. Most of the equipment and supplies have been delivered at this point. All of the pavers in the backyard are being reset due to unstable positioning causing a tripping hazard. A handrail for the basement steps was installed. Work has begun installing an exhaust fan in the bathroom which did not have one before. This is an important step to prevent future damage to the bathroom from steam and moisture. The existing appliances also all needed to be replaced and the new models are expected to be delivered in the next week or two.
Fortunately, all of the floors are in excellent condition and the walls were all recently painted before the house went on the market. The bathroom was also recently remodelled and looks great, and the kitchen counter was replaced in the last few months.
As one of the more exciting updates, Liberti Church Riverwards has asked to adopt Foundation House in order to furnish the home by 10/1 for the expected refugee family. They are already well on their way towards completing their list of furniture and supplies they hope to obtain by then.
What’s Next?
There is a known leak in the main water line to the house that needs work. We will also be patching a number of weak points in the roof. A new water heater is needed and should be installed soon. There is some minor electrical work needed and a variety of small finishes and hardware to replace. We are also waiting on servicing for the chimney and boiler to get them into top shape. Overall, we are just a bit behind schedule, but still hoping for a 10/1 move in date.
NSC does not officially have a family matched yet (there is often less than 2 weeks notice when a family is arriving, so this is not unexpected), but with the surge in refugees, they are confident a family will be ready by move-in day.
Foundation – Settlement
<< AUGUST 30, 2021 >>
Settlement
It’s official! Foundation House is now Compound Impact’s very first impact home. Settlement passed without a hitch thanks to our fantastic realtor Yuriy, from TrustArt Realty. Now on to the fun part…
With keys in hand, it’s time to get right to work on the rehab so we can get a refugee family placed as soon as possible. Not only do we want to get a family into a safe home as soon as possible, but every week that the house is not rented is another week of expenses without income. In order to keep the project on track, we’ll need to get it rented on time.
The contractors were able to walk through the property before settlement and develop a full scope of work for the repairs needed. A scope of work is a contractor term for a detailed list of all the work that needs to be completed on a given project. In total, repairs and upgrades for Foundation House are projected to cost between $15,000 and $20,000.
Pictured below are Compound Impact cofounders and brothers Cody Hobelmann (left) and Kealan Hobelmann (right) sitting on the steps of Foundation House not long after closing.
What’s Next?
It’s rehab time. Our general contractor will be bringing in a number of subcontractors to complete a variety of upgrades and repairs over the next few weeks to get the house into top shape before move in day. At the moment, we are aiming to have a family placed around October 1st.
With a move-in day set, we will also begin to work with Nationalities Services Center (NSC), one of Philadelphia’s major refugee resettlement agencies, to match a family to our impact home. With 3 bedrooms, the most likely match will be a larger family with several kids.
Foundation – Afghanistan
<< AUGUST 28, 2021 >>
Afghanistan
This week, as the U.S. scrambled to get the last Americans and Afghan refugees out of the Kabul airport, we received news that over 10,000 Afghan refugees would be coming to Philadelphia. While many of these may end up being placed in other cities around the country, there is going to be a dramatic increase in the number of Afghan refugees in need of immediate housing in Philadelphia in the coming months.
There could not be a more direct example of God orchestrating His plans than this. When Compound Impact was created earlier this year, we had no idea that there would be a massive refugee crisis in the city. Yet here we are with a massive influx of refugees expected over the coming weeks to months.
Our prayer this week is that God would continue to help us to develop systems and processes to be able to step into this housing crisis at an even greater level, and that many others would come alongside these efforts to support our brothers and sisters.
Foundation – Price Reduction
<< AUGUST 14, 2021 >>
Price reduction
Remember when we talked about inspection contingencies? When an inspector comes through a property that is under contract, they are required to submit a comprehensive report to both the buyer and the seller about the state of the property.
We knew that the house would need some work, but the inspector pointed out some electrical issues that could be a bit costly to repair. Even though we were already planning on doing some electrical work, we were able to negotiate a fair $3,000 price reduction from our initial offer.
What’s Next?
The next major milestone will be our settlement date, when we officially close on the house and ownership is transferred. Before that time, we will have our fantastic team of contractors begin to walk through the house to get a formal estimate of how much work will need to be taken care of before the house can be rented.
Foundation – Under Contract
<< July 30, 2021 >>
Under Contract
Just a few days ago we managed to get a house under contract! The house is a single family home with 3 bedrooms and 1 bathroom. We were fortunate that the sellers were in a bit of a time crunch, so they were graciously willing to reduce their price from list price in order to sell the property quickly.
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Paying in cash
One of our key purchase strategies is paying for houses in cash. When anyone makes an offer on a house, and that offer is accepted, the house is considered “under contract”. The sale of the property has not occured, but the contract is an agreement between the seller and buyer that the sale will occur on a future date (called the settlement date).
While the house is under contract, there are a number of ways that the deal can fall through. For example, there is often an official inspection of the home by a licensed inspector. If there are any serious concerns, the buyer can leave the agreement and have their initial deposit returned. This is called an “inspection contingency”.
Another common contingency is a financing contingency in which the buyer can back out of the deal if they are not able to secure a mortgage for the property. Many deals fall through this way. However, if the buyer is going to pay in “cash”, meaning they are not going to be getting a mortgage from a lender, then the seller does not have to worry about the financing falling through at the last minute.
For this reason, buyers (like Compound Impact) who are able to pay “cash” for a property have a significant advantage over another buyer who will need a mortgage to purchase the property.
We do not fundraise the entire purchase price before purchasing a property. Instead, we fundraise about 25% of the property value and use short term loans (which last only a few months) to obtain the remainder of the “cash” needed to purchase the property.
What happens in a few months? Don’t worry, we’ll get to that soon!
What’s Next?
Now that the house is under contract, we will have a licensed inspector walk through the property to make a formal report on it’s overall condition. As long as there aren’t any major issues, we’ll move on to settlement in about a month, at which point the official sale of the property will occur.
Foundation – House Search
<< July 15, 2021 >>
House Search
We are currently looking at a number of potential properties, but do not have a house under contract yet. The property selection process is one of the most important steps in the process. Purchasing a house for the wrong price can end up costing thousands of dollars, so it’s important to get right. And making an offer too low can lose a potentially great deal.
What to Look For
When we look for new properties, we look at many factors. But there are a couple that stand out.
Purchase Price: The purchase price is one of the most important factors, but the list price is not always the final answer. We often bid under asking price, though some properties may sell for even more than the list price.
Work Needed: We always look for houses that need significant about of work done. This is an important part of our model, and ultimately allows us to buy houses much cheaper than they are worth. The more the house needs work, the lower the price we can get.
Cost of Rehab: We always make an estimate of how much the rehab of a house will cost. We are able to make our estimates using experience and our highly qualified team of contractors who will often walk-through a house before we even make an offer. This process helps us make accurate projections.
Market Rents: All of our refugee families pay normal rent rates for our impact homes. It is important to remember that refugee families aren’t in need of discounted housing, but rather of fair and accessible housing. Rent is determined by the current rates of nearby similar properties and is an important factor in our financial analysis.
We are currently looking in the NE Philadelphia neighborhoods of Tacony, Mayfair, and Oxford Circle. These neighborhoods are home to many successfully integrated Eastern European refugee families as well as Syrian and Afghan communities.
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What’s Next?
We are continuing to search for the right property. When we find a good fit, we make an offer immediately. It is not uncommon to have to make several offers before we get a property under contract.
Foundation – Funding Completed
<< July 06, 2021 >>
Funding Completed
It’s hard to believe, but funding for the very first Impact Home is officially complete. We are ready to start looking for properties and will begin immediately.
- Initial Project Funding 100%
What’s Next?
At this point, we’ll be looking for our impact home! As you might expect, not every neighborhood is created equal when it comes to housing a new refugee family. Different pockets of Philadelphia have a history of immigration from different parts of the world. And some areas have a particularly strong history of successful refugee resettlement for specific people groups.
We work closely with some of the major refugee resettlement agencies in the city to determine locations where refugees would be most successfully integrated into the Philadelphia community. Our next home will most likely be located in NE Philadelphia.