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Growing up in Culver City (near West Los Angeles) real estate had been a bit intimidating...for example my parents house is worth over 10 times what they paid for it...and I don't make 10 times what my dad did! I noticed a lot of people in my church (LDS) moving out of town as they could not find a way to buy a home with one income. We were really getting priced out of the market as having a parent raise our kids was a priority. Realizing a better strategy would be needed I took a Real Estate Investment class at El Camino College in Gardena and loved what I learned, in particular a book that was on the requested reading "Buy and Hold 7 Steps to a Real Estate
Fortune" by David Schumacher. His book is a lot about finding the right area and going with multifamily. I felt like this was the way for me. Many people don't consider it but a duplex costs the same or sometimes less than a single family home. Why not have someone else paying half or more of your mortgage? This could make up for only having one income.
The area was the other challenge so I began visiting some areas of LA that were a little less expensive than Culver City with friends who grew up there. We would drive slowly block by block taking notes and talking about the areas. Then we found it! Just east of La Brea, North of the 10 freeway a neighborhood that was almost all single family home, almost no large apartment complexes but maybe 10 to 20% small multi-family (2-4 units). This was just what we wanted, mostly owner occupants helps an area but we need something that can help us pay our bills.
We were blessed to find a 4 unit property on our favorite street in the area that has a 3 bed 2 bath front house and three 1 bedroom units in the back! We offered over asking and after trying to buy something for almost a year closed on the MAJOR fixer upper. We were blessed to have it completely un occupied by the time we closed escrow so we could fix up all the units and rent it for market rate. To save money we were builder owners on the project and hoped we could do it for $40,000. Man were we crazy! We blew through that in no time so we started getting additional funding from a host of different sources, $15k here $10k there etc. We had to finish the project and as this would be a rent controlled apartment we could not afford to go cheap on our finishes. When the place is vacant you have to take advantage as it may never be vacant again in your lifetime! (that a post for another day) Well thank God after a ton of work and months of drama, that included a birth of our baby girl who fortunately came on a Friday night so we could shut down the project for the weekend, we rented out the 3 units to great tenants. We were very happy to get $1300 for 2 of them and $1200 for the 3rd as we cut a deal with an ideal tenant, missionaries from our church (they wire their money 1 to 2 weeks early every month, have their own clean check and are a pleasure to have around). Now we had the income we needed to pay the mortgage and started working on our home in front. We stepped it up a notch for this bigger home and put in marble kitchen floors (discount from a family member) distressed hardwood, removed most of the drywall, opened up the kitchen to the dinning, turned a 3/4 bath to a full and changed a hallway bedroom into a separate entrance bedroom. See the pics/video
7 layers of roofing!
Ugly but we managed to keep them after painting them white and putting in new hardware.
Rear Units at Orange Dr.
Had to get rid of the formica
Added a new window to make living rooms more open feeling.
Washer Dryers in each unit has really helped our rents.
The Lath and Plaster was in such poor shape it had to be removed for new drywall
Purchase $473,000 Remodel costs: $130,000
We did a cash out refi about 9 months after purchase and recovered all our remodel costs at the property appraised for $650,000. 1 1/2 year later it had appreciated to $800,000 that allowed us a HELOC that gave us the down payment on our next place....
Updated almost 4 years ago
I accidentally put east of La Brea is our investment area, it's actually west of La Brea. And yes James L. we could sell it for over $1,000,000 now (2016)
Great job done everybody. It really gives a boost to newcomers. That is all about helping each other.
Looks like you really hit a home run on this one, Alma! I couldn't imagine what you had to go through to make it happen. I've been house hacking in Culver City, and it looks like you really beat Culver City at its own game. Seems like it should appraise for way more than the $800k you mentioned by now.
Purchased Feb 2015 for $69,000
Repairs and cost to carry of $22,649
Sold July 2015 for $124,900
Pre-tax net profit of $22,351
Pictures from the above post!
Just wanted to share another BRRR story. My partner and I purchase a package deal of 4 single family homes. We got a pretty decent discount taking the package with squatter issues. After vacating and rehabbing the full package was ready for cash out refi in 1.5 months. Out first home was just appraised and we walked away with +20k. Purchase price for each home came out to be $26,000. Our rehab cost for our first appraised home was $14,000. Repaired roof, new heating system, new flooring and interior paint, updated kitchen and bathroom with tile flooring. Our appraisal came back at $81,000 and cashed out 75% walking away with approximately $60,000 - $40,000 (purchase and rehab). = $20,000 profit. We have a tenant in there now and set to pay off free and clear in 5 years. I really believe BRRR is a great way to long term wealth. Our new concern or issue which is a good thing is what to do with the excess money. Buy down our current portfolio or expand our consistent acquisition fund?
Thanks to Bigger Pockets we are learning everyday and appreciate all the help and feedback from everyone. Good luck and please reach out for any questions or more info.
omg what?! I would've NEVER thought about assisted living! So genius. Great profits considering you said you didn't know anything about that kind of property. What made you want to take on that kind of project?
Originally posted by @Kevin Fletcher :
Id be happy to share my last deal. I bought a condo in a retirement community for a flip, and the purchase closing which I did with my own Real Estate license was closed on December 18th of 2016. After getting all of my plans approved through the HOA I started the demolition on the 27th of December. I used contractors through the whole process and it was the first flip I have done with out doing any of the actual physical labor myself. I did design and buy all of the finishes and delivered most of them to the job site, but for the first time it was a relatively hands off experience. There were a lot of problems, as there always are but I am really excited with the finished product. I finished the rehab on the 19th of February and I just listed the property on the MLS. This is also will be the first project that I have bought with my license, project managed, designed, funded, and sold by my myself from start to finish.Below are some numbers on the project and photos. Condo 2 beds, 2 Baths, 1200sqft.Purchase Price = $153k $158k- $5k (waived commission)= $158kREHAB = $28KHOLDING COST = $3KLISTING PRICE = $232,900BUYER COMMISSION/CLOSING COST= $10K PROJECTED PROFIT = $38,900BEFORE PICSAFTER PICS CLICK THE LINKhttp://tours.virtuance.com/471780
Id be happy to share my last deal. I bought a condo in a retirement community for a flip, and the purchase closing which I did with my own Real Estate license was closed on December 18th of 2016. After getting all of my plans approved through the HOA I started the demolition on the 27th of December. I used contractors through the whole process and it was the first flip I have done with out doing any of the actual physical labor myself. I did design and buy all of the finishes and delivered most of them to the job site, but for the first time it was a relatively hands off experience. There were a lot of problems, as there always are but I am really excited with the finished product. I finished the rehab on the 19th of February and I just listed the property on the MLS. This is also will be the first project that I have bought with my license, project managed, designed, funded, and sold by my myself from start to finish.
Below are some numbers on the project and photos.
Condo 2 beds, 2 Baths, 1200sqft.
Purchase Price = $153k $158k- $5k (waived commission)= $158k
REHAB = $28K
HOLDING COST = $3K
LISTING PRICE = $232,900
BUYER COMMISSION/CLOSING COST= $10K
PROJECTED PROFIT = $38,900
AFTER PICS CLICK THE LINK
Purchased in Los Angeles for $550K in April 2015, sold it in Jan 2016 for $975K. I discovered some space on 1st floor of home that was used as storage, we did some structural work and were able to legally add on approx 250 square feet to the home. Also added new deck to upper level that has amazing views.
I saw the interior before/after pics on MLS and I must say I'm impressed. It looks like you got your hands dirty, and the result is a stunning balance of elegant/hip. Obviously, the market agreed because you achieved a very quick sale for well over asking. Would you mind sharing more details about the rehab and costs, and what you look when purchasing?
Originally posted by @Mark Ferguson :
I sold a flip last Friday. It was a doozy! I bought it in April of 2014 and yes it did not sell until February of 2016 and no it was not rented. Had huge problems with contractors and I didn't get started working on it for months because I had too many flips going. Bought it for $75,000Repairs were about $70,000Carrying costs about $5,700Financing costs about $7,000Selling costs about $8,000Commission saved -$2,200 (since I am an agent and got paid a commission when buying)Seller paid closing costs $2,000Selling price $220,000Profit about $50,000Am I allowed to post before and after videos?https://www.youtube.com/watch?v=FnFtorEyG78&index=...https://www.youtube.com/watch?v=O1K2m7SxzlY&index=...
I sold a flip last Friday. It was a doozy! I bought it in April of 2014 and yes it did not sell until February of 2016 and no it was not rented. Had huge problems with contractors and I didn't get started working on it for months because I had too many flips going.
Bought it for $75,000
Repairs were about $70,000
Carrying costs about $5,700
Financing costs about $7,000
Selling costs about $8,000
Commission saved -$2,200 (since I am an agent and got paid a commission when buying)
Seller paid closing costs $2,000
Selling price $220,000
Profit about $50,000
Am I allowed to post before and after videos?
If you don't mind me asking, if you had the property for nearly 2 yrs what did you do to keep the holding costs so low?
If you notice my carrying costs are seperate from my financing costs.
Hi @Adam Phebus , thanks! I did A LOT, all new systems, windows, doors, roof, etc.
A few things I look for: hidden value, in this case it was adding on the sq footage, creating a really great master suite and also leveraging the views. Prior to purchasing the home had no deck and the home is perched on a hillside with really spectacular views. So adding the deck was very much a value-add. Prior to purchase the previous owners had turned the garage into an office....I switched it back to a garage.
This post is slightly premature, but I'll go for it anyway. Our first flip is on the market (partnership with @Dave J. ), and we had a great response at the open houses this weekend. We've got ourselves the old-fashioned bidding war we were trying to generate, with multiple offers already submitted. I'll update the post once we are under contract.
But here's what we know so far.
Let me emphasize that this was our very first flip. We knew going in that we had a TON to learn, but really wanted to learn by doing. We had been on the sidelines and talking about it for long enough. We expected to make mistakes, but hoped to be able to learn our lessons without losing money. At the outset, we established breaking even and learning as a win. Any profit was a bonus. We obviously ran the numbers and planned to make money, but we weren't going to consider it a failure if it didn't all go according to plan -- as long as we learned something. That may seem a silly mindset to some, but we truly valued the education we would get from the whole process.
We bought the house from a wholesaler, who had it under contract from a bank (REO) at $72k. We later came to believe that we overpayed for the house, which was definitely lesson #1.
We really liked the numbers with our $80k rehab budget. We liked them a lot less with our $100k rehab reality. We didn't have a tight enough scope or timeline in place, so the price tag was an ever-moving target. A much firmer contract with our contractor is lesson #2.
List price: $225k.
This part has actually gone according to plan. Our ARV estimate ended up being on the low end of what realtors suggested once all was said and done. We opted to price it slightly under market in order to ensure a quick sale. Beyond that, we felt that we could generate multiple offers in the first week if we priced it competitively and marketed it aggressively, ultimately getting a higher selling price than if we tried to price the house more aggressively. As of this writing, it looks very much like the house will sell for above asking.
This is obviously far below what we planned on, but as I said in the beginning, we consider it a pretty big win. We know so much more now that we did a few months ago, and we know that is going to help us do a much better job on the next flip and every flip that follows. Our break-even number is $215k when accounting for holding and closing costs. We'll see where we ultimately land, but we know we'll make a few bucks. The profit goes straight into marketing so we can build a pipeline of motivated sellers.
I didn't yet get to lesson #3, which is the market we bought in. We intentionally sought out a property in a low-end town for our area, since it gave us the opportunity to get into the market for just $82k. And we were right about the ARV for that neighborhood. The problem, though, is that our ARV put us at the very top of the market for that town. If we put more money into improvements (like new siding, for example), it wouldn't move the list price at all, since we were already the nicest house in the neighborhood without those extra improvements. Buying in a town just one tier up would have given us more flexibility to build in more profit.
A few pics:
Living room before:
Bathroom before (2nd-floor bathroom was used as a makeshift kitchen):
Main floor during (we opened up the floor plan completely):
And a few after shots:
This is amazing! @Judy Rae
Wow nice guys
Great deal. Looks great. This is motivation to take action.
Thank Chris tell me; need know lot of the more is it wholesale house lot out these but I when to the bank they tell me my credit score are too low, I has too fragment, try something to do get my feet up and stand up go tell Bigger pockets help me out ! notice it no money to loan it the house exchange it . Also foreclose it lot out there ???
This is one my client just closed on. He really did a beautiful job on it.
@stevesnyder that house looks good.
How can I put pictures on here from my cell phone?
Mini update on my post above.
We had great response at the open houses on the weekend (Saturday and Sunday both), and have received three written offers, all above asking. I can't comment on the details until we are officially under contract (or maybe closed -- I don't know if there are rules governing any discussion of the offers themselves), but it certainly appears we are going to do better than we thought!
Thanks @Theodore Freeman , @Garrett Chisolm , and @Imani Bell for the encouragement and feedback. @Dave J. and I are super excited to get a win under our belt on the first try. Mostly, we're excited that we took action!
I think I had a customer looking at that same property.... Or maybe there is another currently for sale.
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