Hey Bigger Pockets!
Once Again, im not being the best at posting, but I promise ill get better once I have some more time! Too many houses. BUT, I wanted to at least post one that maybe others can learn from. This house was a standard flip for us, but what made it interesting to me was how many other investors passed on it, and I could not understand why. Whenever this happens, it makes me very cautious to buy, but I did it any ways. Below are some pics and all the details of the deal, learn from my mistakes and successes!
The Property Details:
When purchased, this house was a 3/2 1600 sqft house, after rehab we were able to add 130sqft by finishing the utility area as well, making the house 1730 sqft.
This was by far NOT the worst hoarder house I have done, this was surprising full of stuff, but it was not full of CRAP, like many hoarder houses are known to be full of. I found brand new freezers, and never been opened before elliptical, yard tools, expensive camping gear un opened, and the list goes on. So this has been my favorite hoarder house as far as stuff left behind goes.
Why didn't the other investors buy this house??
This house was sent to me by a newer wholesaler in the area of Seattle (this house is in Renton). Newer wholesalers are not the best at marketing and not the best at analyzing the value of a property. SO when the wholesaler sent the property out, he had bad comps and low values. Many investors just glance on wholesaler emails (believe it or not, we don't always read your email blast of a property...you need to actually call some of us if you want us to look at your badly put together marketing email for a local property). On this deal, I decided to actually take a look, and RUN MY OWN numbers. I know the area, and saw that the resale that we quoted, 315k, was actually more like 330k if the house was rehabbed correctly. SO I bought it when many others did not and they all passed, I was the last investor he sent it to before his contract expired.
We had to gut most everything, but this was pretty much a standard cosmetic flip in the area.
- Paint Int/ext
- Major demo/trash
- Update both baths, including cutting into slab in basement in order to set the tub to floor level
- Cut in a sliding door in basement great room
- New kitchen, knock down wall to open up
- new Flooring: laminate planks, vinyl, tile baths, carpet, etc
- Major landscaping in the back yard: we had no idea there was a 30x20 foot cement patio back there, I didn't include the pics, but it was so over grown with stuff, we never saw it when we bought it.
- All other basic cosmetic stuff that you do to make a new house: door, trim, etc.
TOTAL REHAB Costs: Roughly $46,000
The unfortunate and fortunate part of this project was that I didn't have any freed up contractors to work on the project when I purchased it. I had too many jobs going on, and Washington, Specifically Seattle and King county, is hard to find good GC's with the right pricing. So I sat on this house for almost 30 days with only getting Demo/trash done.
The fortunate part about this, was I was marketing for new GC's at the time since our volume demanded it, and I found a great group that just fired the local hedge fund here since they were paying them less and less. Once I finished negotiations with the new GC, he literally had all his crews (16 guys) on this one house! And in less than 3 weeks the project was done! I now have a new relationship to add to my approved contractors list, and since then this GC has done 4 other houses for me.
Purchase: $211,000 (cash)
WA Excise tax (1.78%) and sellers closing: $9990
Agent commissions on resale: $16,650
Sellers concession to new buyer: $7,000
Staging fee: $1500
SALES PRICE: $333,000
Total Net Profit: $36,911
NET Project ROI: 14.1%
Not too bad of a deal for a simple cosmetic house.