Smyrna, GA Flip & Profit Analysis - New investors Read to Learn

15 Replies

Summary – Key Points

  • Less is more – More bedrooms does not always relate to higher sales price
  • Negotiation – It does not matter what a property is listed for on MLS, make an offer based on what will make sense for you
  • Unexpected Expenses – Keep an extra budget always allocated for the unforeseeable

We bought this outdated & desperately in need of modernization 3BR 1BA SFR in Smyrna, GA on February 27th, 2018 off the MLS. I have done a couple of flips in this area and was very familiar with the neighborhood. It was listed for $170K on the MLS. After doing an initial walk through and coming up with a renovation budget and sales comps we decided to offer $105K (Yes an offer $65K LOWER!) a few days later the seller countered and we ended up buying the property for $110K. We paid for the property in cash and were able to close quickly. We had an ARV in mind for the property of $215K-$225K, with a renovation budget of $40K-$50K.

*ALERT ALERT* – DO NOT BE AFRAID TO MAKE OFFERS! YOU NEVER KNOW WHAT POSITION THE PERSON IS IN AND WHAT THEY MAY ACCEPT. DO NOT BE SHY, SCARED, EMBARRASED. JUST DO IT WITH LOGIC AND COMMON SENSE.

Demo started in the beginning a March and took around 75 days of renovation to completion (Longer than usual four our renovations but we had some contractor issues). We completely gutted the house and gave it a new functional modern interior layout. We converted the property from a 3BR 1BA into a 2BR and 2BA with a full master suite with walk in closet and stand up shower with double vanities. This is what I mean by the concept less is more, you have to know your market and your particular demographic; who will be your end buyer. This property we were targeting a couple, retiree, single business professional. We felt instead of having 3 small bedrooms we would add value and convert one of those small bedrooms into a master walk in closet with a master shower. We added a patio slider door and created a deck, I always like to do this because it is relatively inexpensive, however is a great selling feature. We had to do all new plumbing and electrical throughout the entire property as well.

*ALERT ALERT* – SOMETIMES LESS IS MORE, YOU HAVE TO ANTICIPATE WHO YOUR END BUYER WILL BE AND SEE IF PERHAPS LESS BEDROOMS CAN EQUATE TO A PROPERTY THAT WILL BE MORE IN DEMAND TO THAT BUYER.

This house gave us a couple twists and turns however we got through them. First of all when we opened up a lot of walls we noticed there was a lot of water damage and we had to replace a lot of rotten wood along with all new insulation on exterior walls and a lot more sheet rock then we anticipated. We also noticed throughout the renovation that water was getting into the basement and we had to re-pour cement along the back side of the house and slop the grade away from the house this alone was an extra $3K expense.

*ALERT ALERT* – ALWAYS KEEP EXTRA FUNDS IN RESERVE FOR UNEXPECTED EXPENSES. ALWAYS HAVE ENOUGH PROFIT PRICED IN TO YOUR DEALS SO THAT IF UNEXPECTED EXPENSES ARISE YOU WILL STILL BE ABLE TO MAKE A PROFIT.

We accepted an all cash offer of $212,500K after being on the market for about 7 days. The cash offer was the winner because we did not have to have an appraisal and it was quick close 15 days. We could have sold the property for $5K higher is we went with a financing offer. Net profit on this deal was $37K.

                                                               

Images of the project can be seen here (click here) > Rehab Final Images

Check out some before and after pics below. If you have any questions regarding the project let me know, will be glad to answer for you. Also leave a comment about your favorite aspects of the re-design or what you would have done differently.

Keywords * Smyrna, Atlanta, Marietta,*

what kind of countertops did you use for the kitchen. Also did you use real hardwood floor or a different material?

Great work @Alex Babayev !  I really like your point about not being scared to offer something backed with logic and some common sense!   I especially like the exterior rehab, looks awesome! 

Cheers!

You did well to renovate with new systems for $53k.  I've not seen many folks use laminate floors in Atlanta.  I know in CA, it's more popular.  Did you get any good/bad feedback on the flooring?

I like your 2BR/2BA strategy especially with good outdoor living space.  Nice job @Alex Babayev  

Great job. I was just wondering if when you make an offer like that, do you explain your reason to the seller or seller's agent or just present the number? I mean, obviously the selling agent knew the arv and they probably figured 40 k of rehab to bring it to optimal market price so they listed it for 170k.  You however need to make a profit so you have to get it for a lower price then someone who is going to live there. So, I think there has to be some motivating forces for the seller to accept and for the selling agent to council that this is a fair offer. I agree, you never know the full situation so offer and see what happens.  

What motivating forces do you suspect? Is it a slow market? Was it a divorce? Was it in an estate? Etc etc. 

I write this because I too have presented low offers but often research the property or owner to gather intellegence. I might even research the Realtors sales to find out their experience. 

Just some thoughts for new people afraid of making the low offer.

Hi @Rick Baggenstoss I have done several flips in Atlanta and mainly always use laminate, since my remodels are pretty involved it is hard to save the old hardwood because a lot of the areas I open walls and change the interior layout are then missing hardwood. I have never gotten any negative feedback on laminate as a finish. 

My standard now is to always create an outdoor living space, I always try to find a way to build a deck if one does not exist. 

Hi @Scott Harper yes, I tell my agent to relay the message of why I am making that low of an offer. We are transparent and tell them we are in it to make a profit and these will be our costs to rehab the property. The motivating forces here was that this was an estate sale with 3 out of state sisters selling the property. My quick cash, no closing costs, no appraisal, no inspections was attractive to them. 

Nice write-up, thank you @Alex Babayev .

A question - when you make an offer with "no inspections" stipulation, does it mean you wave due diligence altogether or do you still have due diligence but the offer is not contingent on its results?

Nice work!!! Love the specific call outs. I also love that you guys made a "low" offer, but it wasn't unreasonable because you had the research and analysis to back it up.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you