1.5 million appreciation on a 1 million house?Howwww??

Question

So i was watching this tv show on hgtv called "My House Is Worth What"?,and this guy bought a house for about 1 million dollars,he did few renovations and improvements and its value appreciated to 2.5 million dollars..How is this possible?Is this even possible in real life or only tv shows?Just curious :)

Btw heres the link if you want to see it(episode name:cash for kitchen):Video is divided into 3 stories,the part i am talking about starts at about 14:00

http://www.hgtv.com/hgtv32/videos/index.html

Will Barnard · Answer

As to the OG poster, yes, that is possible, but again, the total amount invested (acquisition plus rehab) and the actual sold price is what matters. Numbers posted may not be as good as they appear. You also have holding costs and resale costs which cut into that profit spread.

Karen Margrave · Answer

Vaishal Patel If it sounds to good to be true, it probably is! I've been doing this for 25+ years, and have never seen a deal with that much profit for so little work.

You always need to ask yourself, is the property being 'valued' at that by someone, even if it's an appraiser, or did it SELL for that much?

Ryan Moses · Answer

While it may be possible, don't expect to land on such a deal in your life time as they are rare as those who win the lottery.

Robert Adams · Answer

Vaishal Patel it is definitely possible but there are a lot of variables that need to fall in line for such a deal to happen. The market you are buying in is one of those variables as well as the others mentioned by others on this thread.

I would not expect to go out and do this on every deal but it is not impossible.

Rich Weese · Answer

I have a good friend from another country that used to post fairly regularly on BP. A few years ago, at the height of the foreclosure market, he found a niche that enabled him to make extremely high profits. He found an area where he could buy homes with an upper value in the millions. He would take cash to the foreclosure sale and have very little competition in that price home. An example would be to buy a potential $3 million home for 50% of value or $1.5 million. He made the rules since he held the gold. He would then find buyers that did not have the $2 million plus in cash to bid at the foreclosure sale but could certainly provide the down payment required and the credit required by a lender to purchase from my friend after the foreclosure. A sale of the home with nearly ZERO work might provide a million in true profit. I don't have any specifics as to exact amounts but he did provide me with a beautiful brochure of properties he had purchased and sold in the same fashion. These returns would provide pretty close to the amount you're talking about. So it can be done and has been done. Rich

Karen Margrave · Answer

Jamal Harb Once again, the kicker in the scenario was the original poster said "he did few improvements and renovations". The example you gave "purchased at 1.2M, renovated to the max and listed within 6mths for 2.8 M." see the difference? Also, note.. you said "listed" not "sold" for 2.8M. What were the costs of renovations?

As Will mentioned, you have to figure in ALL the costs involved with the property, before you can figure profits, and I'm betting the profit on the example you gave wasn't near what you think it was, though it probably was healthy.

Jamal Harb · Answer

I've seen this happen many times in Vancouver BC. I watched this one house which i was interested in, purchased at 1.2M, renovated to the max and listed within 6mths for 2.8 M. I cry every time I drive by this house and kick myself for negotiating too hard and lost the deal.

Jon Klaus · Answer

Linked http://www.hgtv.com/hgtv32/videos/index.html

Brandon Turner · Answer

Hey Vaishal Patel - I'd say this is not typical - but not impossible, especially for that area. Take a look at Will Barnard's 7 Figure Flip here for a similar story with a BiggerPockets' member.

1.5 million appreciation on a 1 million house?Howwww??

1.5 million appreciation on a 1 million house?Howwww??

Most Popular Reply

10 Replies