Flipping Fail?
I looked for a forum called "flipping fails" and could find none, so in the interest of full and honest disclosure of good, bad, and ugly sides of this business so that you don't get the wrong idea that real estate investing is all roses and buttercups...I present the following "flipping fail" to share a big lesson learned.
This project started with good intentions 2 years ago when I found a HUD home in a resort area of east central Georgia called Lake Oconee. Below is the before pic. It was a nice 3000 sq ft house on a 2 acre wooded lot across the street from a 30 sq mile recreational reservoir where lake frontage homes were listed at $500,000 and up. The house was built in 2005 that had some cheap finishes on the inside and deferred maintenance / wear and tear issues. They never poured a walkway from the driveway to the front step and only 1/2 of the driveway was paved. The section from the street was just gravel. The county had the tax value set at $317,000. I purchased the property for only $200,000 and figured I could not loose.
Repairs included finishing the driveway with concrete, pouring a walkway to the front step, solving a crawl space water retention issue, installing new hardwood flooring, replace all "gold" fixtures with brushed nickel, interior and exterior painting, replacing the septic pump and replacing light fixtures. Total cost of repairs and holding costs: $52,000 more than expected but still ...no problem in my mind. Here is the after pic. I thought it turned out great and someone would jump all over it for $329,000
After all this house would cost $450K if were in my neighborhood so no big deal that we went over budget on renovation by $20K. Well fast forward 2 years later and the house sat and sat with very few showings and little interest. It was a mystery to me. I eventually had to drop the price to $275,000 and it sold within weeks for a grand total of about $3,000 profit in exchange for tying money up for a long time...Fail!
The lesson learned...never argue with the market! The comps are the comps and they are a true reflection of what a property is worth in its local market, NOT your home market. I will never make that mistake again.