77K return . . . but I wouldn't do it again!

36 Replies

Older home with great bones built in 1942 - needed full remodel.


Purchase price: 235k - short sale
Projected costs and time: 45k and 3-4 months.
Actual renovation & carry costs $86k and 8 months of work.
Commissions/concessions $22k
Sale Price $419,900
Net gain $77k


Most proud of... Kitchen and master bath.
Most stressed by... HVAC system overhaul $8,300 after 7 different bids from 7k to 20k.
Take-a-ways: 

- old houses offer many unforeseen challenges.
- cat pee is really nasty!

- it's really fun to see a diamond in the rough take shape!

Kitchen before...

Kitchen after...

Liv rm before . . .

Liv rm nearly complete...

Master bath after...

Looks great.  Congratulations!

Originally posted by @Douglas Larson :

Older home with great bones built in 1942 - needed full remodel.


Purchase price: 235k - short sale
Projected costs and time: 45k and 3-4 months.
Actual renovation & carry costs $86k and 8 months of work.
Commissions/concessions $22k
Sale Price $419,900
Net gain $77k


Most proud of... Kitchen and master bath.
Most stressed by... HVAC system overhaul $8,300 after 7 different bids from 7k to 20k.
Take-a-ways: 

- old houses offer many unforeseen challenges.
- cat pee is really nasty!

- it's really fun to see a diamond in the rough take shape!

Kitchen before...

Kitchen after...

Liv rm before . . .

Liv rm nearly complete...

Master bath after...

Gorgeous bathroom and all out lovely home. What won't you do again? Why not?

Kudos,

Mary

@Douglas Larson - I'm wondering the same thing. This looks like a major success and there may have been unforeseen challenges, but $77k is a GREAT return for 8 months of work. That's a pace of $115k a year if you can keep it up! Are you done with flipping and moving on to other adventures?

Great job! I know what you mean about renovation on older homes. Can be more work than expected.

Great job!  Looks like it was a great success even with the unexpected issues to overcome.  

@Ryan Billingsley

@Nancy Brook

@Mary B.

@Andrew Bondarchuk

Thanks for the questions and comments. I'm definitely not complaining about a good return, and Im not afraid of a little work and the normal issues of babysitting subcontractors. This home is just the oldest property I've worked on and it had way more issues than expected. The list was never-ending! 

I fell in love with the views and the potential but the honeymoon was over after about 3 months (my usual duration for a total rehab) and there was still so much to do! To be clear, I'm not just another guy with commitment issues. I actually have several rehab to rent homes that I'm keeping indefinitely. This project just went on forever.....  From now on I'm sticking to my core business model of homes under 30 and vacant land.

Originally posted by @Douglas Larson :

Kitchen before...

Wow!  I just looked at a 45-yr old house where the kitchen was just slightly more to the minty than this one, but equally as hideous.

Originally posted by :

Thanks for the questions and comments. I'm definitely not complaining about a good return, and Im not afraid of a little work and the normal issues of babysitting subcontractors. This home is just the oldest property I've worked on and it had way more issues than expected. The list was never-ending! 

You should come up to the north east and try your hand with a Second Empire or Queen Anne ;-) 

@Douglas Larson

  did you have cost of capital or just cash out of pocket so no carrying costs?

big rehabs can drag a guy down.. we have those here in PDX.. I am like you give me a 80's rancher that I can get in an out of in 30 days sold in 45 and make 20k.. and have 3 to 5 going at anyone time... its a machine...

When I was loaning HML in the day and guys would get into these big fix jobs and jobs that ran double.. I was usually the only one who really made any money... Hard money loan for instance on your project would have cost 30k or so ... so profit number goes in half and if they messed up even more even less.

Can you elaborate on what you mean by "rehab to rent"?

@Douglas Larson sounds like a hell flip. At least you didn't lose your shirt. Can you elaborate a little on how you're financing these flips? HML, private, portfolio?

The Seattle area is full of old disaster houses like this. The north end is mostly 1950s style ramblers so at least you know what kind of damage to expect.

Originally posted by @Page Huyette :

Can you elaborate on what you mean by "rehab to rent"?

 Sure. That's an investor term for a buy and hold property that needs significant renovation before it can be rented. I'm doing one right now that needs the usual landscape tune-up and cosmetics inside but also a new roof and some HVAC upgrades.

@Kweku Ako-adjei

On mid-range flips I try to use cash but I will use a hard money loan at 2 points orig and 12%APR when needed. On this flip I had a HML for 150K for a few months and paid it off when another flip sold. I factored the money costs into the "carry costs" listed above.

@Roy N.

There are quite a few 100+ year old Victorians in the downtown SLC, UT area. I have seen some great remodel work there but I run as far as I can! In San Fran you can get $2M for a pristine "painted lady" but not here!

@Douglas Larson

Amazing home and photos.  Not a flipper, but love seeing before and after photos.  Very inspirational! 

One question: Why'd you get rid of those sweet green cabinets?

Seriously, cat pee is disgusting, and the after pictures rock. Great job!

@Mindy Jensen

Those "lovely" green cabinets were solid oak from a 90's remodel. If they had been in a little better shape I might have refinished them. Sadly, even the Viking range smelled like cat pee! Everything had to go!  I was able to sell the old Viking for $400 to someone who didn't mind a little elbow grease . . . and a few gallons of clorox!

@John Weidner

All I can say is that every little project turned into 3-5 more projects. Open a wall and find 3 more issues to address. Roofers start repairs and they find a few more problems. HVAC replacement turns into a full duct tear-out inside walls, floors and ceilings, including lots of sheetrock and concrete repairs. Just typical old house stuff from what I hear, but not my normal business model.  I learned a lot and vetted a few new subcontractors but I will stick to the lower hanging fruit from now on! How about You in Chicago? . . . Are you a vintage house master?

Originally posted by @Douglas Larson :

@Ryan Billingsley

@Nancy Brook

@Mary B.

@Andrew Bondarchuk

Thanks for the questions and comments. I'm definitely not complaining about a good return, and Im not afraid of a little work and the normal issues of babysitting subcontractors. This home is just the oldest property I've worked on and it had way more issues than expected. The list was never-ending! 

I fell in love with the views and the potential but the honeymoon was over after about 3 months (my usual duration for a total rehab) and there was still so much to do! To be clear, I'm not just another guy with commitment issues. I actually have several rehab to rent homes that I'm keeping indefinitely. This project just went on forever.....  From now on I'm sticking to my core business model of homes under 30 and vacant land.

HAHAHAHAHA!! Until you stumble on the next deal of the century where you can blow your budget out of the water and still net $77k! I mean, if the deals that good you can't pass it up, JV with someone to "babysit" and STILL make close to $40k ... call me Mary Poppins! :p Great job BTW, rehab looks great.

@Douglas Larson

Great job regardless! What areas caused you to run over the initial 45k budget? Also what did you spend on the kitchen?

This post has been removed.

I totally get it and understand the reason to keep focus toward the core.  Thank you for sharing the experience as it helps me learn through you as I work to grow my backlog.  Regardless, it looks great.  Nice Job!

Originally posted by @Douglas Larson :

@John Weidner

All I can say is that every little project turned into 3-5 more projects. Open a wall and find 3 more issues to address. Roofers start repairs and they find a few more problems. HVAC replacement turns into a full duct tear-out inside walls, floors and ceilings, including lots of sheetrock and concrete repairs. Just typical old house stuff from what I hear, but not my normal business model.  I learned a lot and vetted a few new subcontractors but I will stick to the lower hanging fruit from now on! How about You in Chicago? . . . Are you a vintage house master?

 Great job and return! Just curious, would the costs have been less had you decided to just gut the house from the get go?  I'm a newbie, but the the thought of working on a home that's over 50+ yrs old, makes me think it might just be better to start fresh and upgrade everything, versus dealing with change orders.

@Douglas Larson

@Douglas Larson

I'm really in love with the sliding barn door in the living room.  Was that opening original to the house or did you cut it to open up the floorplan and flow?  Awesome job!

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