Second Fix and Flip Success!
Hey guys I wanted to share another success story. I’ve been meaning to write this sooner but as you guys know stuff happens. But anyways to give you a background this was my company’s 2nd flip this year. We’ve bought two houses since and I will share those once they are rehabbed and sold. But for this one I hope the story helps some people out and they don’t make some of the same mistakes!
So to begin I found the house on Craigslist being offered by a wholesaler for 145k. I saw the ARV was around 190-205k and it needed maybe 5k in work. I also saw that the house was listed on the MLS for 165k but under contract. The wholesaler had it under contract for 136k and I ended up purchasing it for 145k. So for those who were wondering, yes you can wholesale an MLS property.
So the property had a tenant in it. Upon taking possession I served the tenant their 30 day notice because their lease was up. There wasn’t a security deposit so I was concerned about that. So to keep them happy I offered them about $500 cash to move out early and leave it in good shape. They were able to move out in about 3 weeks and left the place in good shape. It was a win-win.
Once we got the property we had some decisions to make. The floorplan was really weird. If I kept it as it was I thought it would be a quick and easy flip. So we chose that route and repainted, added baseboards, refinished the bathroom cabinets, added granite to the kitchen and bathrooms, added used stainless appliances, and cleaned up the yard and house. It ended up being around 7-8k for everything.
We put it on the market for 210k and eventually dropped it to 190k after 30 days before we got an offer. We got a full price offer with a VA Loan but they backed out after a couple days. We then decided we needed to fix the floorplan because every agent gave the same feedback. So we took it off the market for a week and changed the floorplan. It added about another 6-7k in rehab costs. As soon as we put it back up for sale the 90 days had passed and now the home was FHA loan eligible. We put the price back up at 202k for the new added value and we had two full price offers first day.
So we accepted one of the offers and went into escrow. The buyer got the appraisal and it only came back at 189k. We end up finding out that the house was actually around 1700 sq ft versus the 2000 sq ft we all assumed it was. For the past 20 years or so the county has taxed it as 2000 sq ft because the original owner claimed the garage was converted. It wasn't so that's where the drop in sq footage occurred. So now we had to deal with 1700 sq ft comps and that's where the 189k appraisal came in. This was an FHA buyer so they didn't have cash for the difference. Their offer had closing costs included so they ended up eating those and I ended up dropping the price to 189k. It ended up being about a net 7k loss in price for me.
All in all from start to finish the property took 4 months to buy and sell. After hard money fees, realtor fees, and the loss in purchase price I still made about 10k on the deal. It was a great deal because I learned how to deal with a tenant, how important floorplan is, and that you can’t trust what the tax assessor says about sq footage. And on top of it all I still made 10k. So it was a great success. Here are some pics of the home. I hope this story helps some of you guys!