My 2 partners and I completed my second fix and flip in Berkeley. One partner is a real estate agent and one is a general contractor. I'm just a guy who likes real estate but has a full time job. This deal, similar to my last deal, was found off the MLS. Unfortunately I don't have any better leads than the MLS but so far it has worked out. The property is a triplex which consists of a duplex that has 2 bedroom 1.5 bathroom each and a single family home that was called a 'teardown' that was 4 bedroom 1 bathroom. The listing agent would not let us into the single family home as it was structurally unstable and would only open the front door for us to look inside. I don't know if I'll invest in something like this next time around as its a big project but I tried to budget for the worst scenario, replacing basically the whole single family house. We bought the property with all cash for 1.05M and initially budgeted 350K for the rehab. Unfortunately, the sellers were right about the property being a teardown and all we were able to salvage was the roof joists and foundation.
The rehab process of the single family home was intense and the permits took months to approve. Delays of permitting, materials and labor all hindered construction and drove costs up. Just the single family home probably cost upward of 250K to rehab and it was a small home (~1,100 sq ft 3 bedroom 2 bathroom). My partner complained that building a house from scratch was easier than rebuilding this. We used similar finishes to my last fix and flip and there was also a 550 sq ft basement that was only 5'10 inches tall. The duplex rehab was more reasonable and cost ~120K and the landscaping was ~45K. Yes, we were over budget by 65K mainly due to more landscaping than I wished and a roof replacement. I'm still learning to be better there and am convinced I can get things done cheaper on my next project.
The selling process was interesting. We staged 2 of the 3 units and my realtor put the property on the MLS as 'coming soon'. An agent saw it, brought the buyer, and they put in an offer which we accepted. This means the house never really got onto the market. Maybe I shouldn't take a pre-emptive offer next time around. There were a few minor financing hiccups as triplexes are harder to finance than single family homes or even duplexes for some reason. We closed on election night to my relief as I didn't know how the market would react.
- 1. I should hire an actual architect instead of using my partner/GC as the architect as they can probably get the permits approved more quickly
- 2. Landscaping can cost a lot of money but does add a lot of value
- 3. Work well with the neighbors as their opinions matter but make sure they understand that we have different goals and try to compromise.
- 4. Weird things can happen (COVID), so don't bet the farm on every project or go for properties that are too high ARV or out of the neighborhood norm.
I'm hoping my experience can help some others either pull the trigger in fix and flips or at least provide some entertainment.
$1,050,000 - Purchase Price - funded by 3 partners in cash.
$415,000 - Total Cost (Renovation Costs)
$185,000 - Commission/Taxes/Fees/Escrow/Holding Costs (Took 1 yr 4 months)
$2,000,000 - Sale Price
$350,000 - Profit
Thank you BP community for always providing help when I need it and sharing knowledge graciously.
@Hayden Hsu congratulations on getting another win! I cannot believe that this is the same place, the work looks amazing!
@Hayden Hsu awesome work! You pulled it off nicely even with all the curve balls.
@Hayden Hsu Outstanding job my man.
Hayden, congratulations! The place looks great, and it sounds like a solid deal in the end. Covid has blown up the permitting process! I'm working on a remodel now, and it looks like it will take me a year and 2 months to get through it.
@Hayden Hsu awesome job! Looks great! I would like to think I would have waited for more offers but then on the other hand I’d want to be done with it after a year! How’d you find this deal may I ask?
Nice work Hayden!