My First Flip - Remotely done in Norther Arizona (near Sedona)

14 Replies

**PICS COMING SHORTLY**

I just found this thread and figured I would post even though the rehab is complete and the property is listed. I have another just starting and will post in another thread.

Note: I live in Los Angeles area and am doing a remote flip. Due to J Scott's book and his podcast I decided to make sure the flip was with someone I could trust intrinsically and would care about the job as much as I do. Thus my birddog, estimator, GC, project manager and everything else is @Kyle Larson my brother who is local to the area. 

Purchase Details:

  • REO listed on MLS. Started at $49k in January of 2014
  • Put under contract for $28,000 in late June
  • Closing delayed 2 months due to electric work needing completion (bank paid $4k to get new work complete)
  • Closed on 9/17
  • Purchase Price: $28,000 ($2k below our our target acquisition price)
  • Paid cash, rehab costs out of my pocket as well to keep minimal holding costs (outside cost of money and opportunity cost)

House Details:

  • Built 1985, 2 bed/2 bath, 950 sq ft on 1/8 acre lot near a creek and now defunct golf course
  • House looks like its manufactured. Had to triple check it wasn't...it isn't :)
  • Estimated Rehab was $13,500
  • During inspection we found termite damage that would cost approximately $2K in tenting and repairs. Since we saved the $2k on acquisition we rolled with it
  • Actual Rehab with termite was $15,500 (fantastic job on estimate by my brother on his first flip. Also thanks to J Scott's estimator worksheet
  • Estimated ARV: We went conservative - $75k
  • Currently listed (as of 10/17) for $87.5k

Rehab Details:

  • Remove old carport and porch
  • Rebuild and reface deck
  • replace both Baths
  • New flooring throughout
  • Fix siding, paint exterior
  • Drywall work, paint and baseboards throughout
  • Heavy landscape cleanup, gravel, etc
  • Appliances, cooling/heating and inside electrical were all good to go
  • Kitchen could have used an update but was in good shape and at this price point was just right for the area.

So this is less of a diary than it is a summary but we still have to sell! I am excited at the possible profit and feel very good about turning the neighborhood eyesore into a nice home for a small family or older couple looking to retire by the creek. Win/Win/Win

Brian

@Brian Larson   That's a nice little project you completed and what a great budget to do it too.  You're right, it looks manufactured and there are manufactured in that area.  Looks updated and clean. The stone parking and the deck are nice.  Just curious, is it typical in that area to not include bathroom mirrors if rehabbed?  Or were the pictures taken before the mirrors were installed?

I buy tax liens in that area and your description of the creek and defunct golf course led me right to the listing via Zillow.  You should do well.  I see a good amount of recent sales for just that area.

I have about 9 liens on vacant parcels in Rimrock and a couple on the other side of the creek and golf course. A 10th one just paid this past week after 4 years and I earned 16% for those 4 years.

Is your next flip in the same area?  I see via Zillow a 3 bdr just foreclosed a few weeks ago there.  I'm heading there in a couple of weeks to scout more locations for my lien investing and do a little hiking around Sedona for a week.

Jerry

Hi Jerry,

The photos were taken just before mirrors were installed.

Kyle

Thanks @Jerry K.  

Good hunting skills :) You must really know the area.

I have seen you on here regarding liens in the past. I would love to speak with you at some point.

Here are some pics. Sorry for not getting in original post.

Before outside. Total mess

Inside not much better

Looking much better outside

Kitchen and common area after cleanup

One of my rules of tax lien investing is to know the area you invest in.  I've spent a lot of time reviewing the area over the last 5 years.  I think that area will show a strong bounce back in the coming years.  The sales are picking up in the past year alone.

Be glad to talk lien investing anytime @Brian Larson   and @Kyle Larson . Good to know Kyle is in the area.  If I end up with home, I'll probably do a flip myself.  Only hold vacant land liens there right now.

Bravo!  I'm such a newbie but am inspired by others taking the plunge with good planning. I'm also in LA and am thinking of attending the Manhattan Beach FIBI.   Good luck Brian.

that's great! Did you save up the 40k or so? Or did u finance? How much out of pocket total if u don't mind saying.

@Michele Moreno  

I have been to the MB FIBI a few times but not recently as my sons soccer tends to be on the same day :( But I highly recommend it. They very much have a similar vibe to BP in that there are no guru's are people selling. The Long Beach ones are usually larger and you see many of the same folks

@Reggie Maggard  I saved the $44K (full amount of purchase, closing, holding costs so far) I had some private money lined up to use but I had enough to do it on my own and I didn't have another Buy & Hold to acquire so pulled the trigger :)

It will be interesting to see how it turns out and also to compare the 2nd flip (I have another thread on that one) to this in regards to holding costs. Sure the CoC return on #2 should play out much better but it will be fun to compare even at different price points.

I can't tell from the pictures, but did you also get new windows or did you just sand down and paint the existing jams? I'm also taking it you did most of the work yourself? Impressive either way, congrads with finding such a good deal!

so this was not the best journal post ever...lots of huge gaps! Sorry about that.

First, there were some new windows put in. Most of the work was done by various handymen, nothing by myself outside of some cleaning, replace a door knob, etc.

So, with that, this is now closed and we did fairly well. Here are the details:

  • See full details above for purchase price, date, rehab etc
  • This area is very remote and thus had very low foot traffic (known going in)
  • It is a stick built house BUT it looks like a mobile and no matter how much we advertised as such, we always got feedback that it looks like a trailer (BUT ITS NOT! :)
  • Sold in March
  • $70k purchase price
  • $3k in concessions
  • Buyer wanted to do a seller carry. I obliged
  • 50% down, 5 year fully amortized

So the net of it is this. We did well. Definitely profit there BUT I will not see it immediately. I felt this was still worth taking on the note as the payments will catch up to the rest of my 'money in' by the end of the year. Now I have a nice income stream for the next 5 years. Not bad!

Overall this was a hit and I am very happy we did it. With that said, we learned a ton about the area, perceived value and the type of buyer at that price point. We fielded some very interesting offers :)

Again, J. Scott's book was hugely influential for @Kyle Larson to be able to estimate accurately. I would have never carried a note (or knew what that was) without this forum/podcast

@Brian Larson Just getting caught up with this thread myself. Good to see you sold. What were some of the interesting offers and what did you learn about the area in terms of buyers? Congrats!

hey @Jerry K. thanks for checking in. My statement around interesting offers may have been misleading and sound like I got offered a bag of golf balls and gerbil food but in actuality it was just some seller carry offers that were interesting.

I had one person offer to pay me above asking and have me carry @5% for 30 years with 1% down. So we are talking about a down payment of $900 and I am stuck with a note that will likely go from performing to non to reperforming several times over the next 30 years. I could just image dealing with this in my 60's...

I had an offer for $0 down, seller carry. stuff like that.

What I learned about the area is that your buyer in that low end home ($75k) range is really looking for more of a manufactured home and that price. this house was not a gem by any means but it was cleaned up nicely, had some great space and an open layout. People acted like at the price we had it, it should have granite. I think once we hit the $74.9k mark we had more attention and I really like the buyers that offered first (even though there was another looking ot offer for more later...supposedly).

all in all, I would likely do a Rimrock flip again IF @Kyle Larson was willing to do it. It is a good drive outside of both Sedona and Cottonwood so its not appealing for laborers or Kyle...ha.

loved the experience, loved the profit and the timeline was not bad. Rural flips are not a quick sale, that's for sure.

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