Before and After.... My First Flip!!!
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Real Estate Investor · atlanta, GA · Member since 2013 · 456 posts · 237 votes
12yGreat job on the remodel Jacob - I wish I had caught this posting earlier. You do really nice work and obviously take a ton of pride in your renovations and the home you are presenting for sale. You need to point that out in your marketing efforts. I've flipped more houses than most over the years but what works for me might not work for you:
The agent who can help you find & negotiate the deal on a purchase isn't necessarily the best person for the job on the sale. Agents often think they are somehow entitled to the commission on the other end of the deal if they helped you buy it. Figure out in advance who the "hot" listing agent is in the market you are buying the next house in and interview them for the listing....even in advance. Chat with them about your plans and get some input as to what you should be doing to make it sell for max price. You don't have to listen to them but it's good to hear what they have to say in advance. I have some agents in east cobb who sell everything they touch at great prices...not always market max...they actually sold one recently before it even was listed. Find those kinds of agents and don't be afraid to split the deal
I wouldn't have lowered the price at all...at least not when you did. I would have cut my listing agents commission back some and ramped up the selling agent's commission to 5%. Agents are commission driven and the more you pay, the more attention you'll get...and they'll be lining up to see you next project.
Shoot a great marketing video of the property and get it online ASAP. I am involved in several companies and video marketing is key to what we do and our success. Check with the local colleges and see if they have a video/media program and see if they will work with you on internship or cheap basis...be they will. Youtube is great...but it has to be a good video. If you feel comfortable, get in front of the camera and explain the salient points of what you've done with the house. No one knows that house better than you and your contractor...I'm sure you are doing some of the work so advertise that. Once you have the video you can post the link EVERYWHERE....put a note in it that you buy houses. CL isn't the place to sell your house...though it might a great place to buy. Post it there but just accept the low baller tirekickers that come from it. With my renters, less than 5% come from CL...the rest are from other sources.
If you're going to keep doing this, get with a great local printer and have a nice postcard size marketing piece done...front & back. Set up the standard one side to be all about you, your philosophy and the "why should I buy from this guy?" Remember back when you bought your first home....the anxiety....the unknowns...speak to that...you have an honest face...use it in your marketing. Get known in your market as the "yes..you'll pay a little bit more but I'm worth it" investor. Also put a note on there somewhere that you BUY houses... I like making things do double duty so get the most out of your $$ and efforts.
Once you have the card set up - use it for each property. Take it door-to-door in a 1/4 mile radius around the property and try to meet some of the folks in your neighborhood. Don't knock on doors....and don't leave it in the mailbox as that's actually against the law....leave it in their front door. You'll have your neighbors marketing for you and you just never know...a visitor might see your card, catch the sexy shower and want to buy it. The card got the ball rolling...not your agent. There is always a hidden market for buyers...just like the one we try to find for sellers.
Raleigh is a big IT town with more men than women. Market the house as a 4bedroom from the get-go...if it has a window & a closet and meets basic space requirement...it's a bedroom. It's also the perfect man cave for someone with a family...it's also, more importantly....the perfect home office for someone who works from home. Marketing is all about finding your niche or creating it;
Lastly, if you are going to keep doing this....reach out to the HR departments of leading and mid-size firms in your area....same with recruiters. The larger firms will have contracts with real estate relocation firms...ask who you need to speak with and let them know about your house and future projects. I know quite a few HR people and recruiters and networking with them brings me business.
Congrats on the house.....hope some of this helps for the next one! happy Investing!
204 Replies
- 12yJacob A.Investor · Raleigh, NC · Member since 2013 · 348 posts · 128 votesOP
Originally posted by @Account Closed:
Jacob: glad to hear about the positive feedback. I don't know where you are with the numbers at this point, but I'd keep at letting serious potential buyers know you are open to an offer that discounts based on the septic. I find that lots of buyers and many agents don't know how to make a deal work for them even when they like it and want it. You could agree to a discount, you could agree to pay for an inspection....but they have to make an offer and ask.
Do you know what the preference is based on? Is it water quality? Or is it potential septic maintenance or failure?
Also, do you know the name of the marble tile product in the shower? I'd like to use it to tile a kitchen counter and back splash.
We have been very clear when talking to the buyers that we are VERY open to any offers. I've even already had the city water/sewer connection priced out and told them what it was and that I would be open to negotiation. That's as far as I've gone as I'm scared blatantly saying to them that I will drop 10k off the price will scare them of. I really have no idea what the preference is based on but I think it's just public perception to the uneducated person that city water/sewer is better for some reason. We've had the septic tank pumped and cleaned and the well water has been checked out. Hopefully, 2014 will bring more showings and a potential offer.
The tile is just directly from Lowe's. It's 12 X 12 Calacatta Tile.
- New to Real Estate · San Francisco, CA · Member since 2013 · 83 posts · 18 votes12y
@Jacob A. - this looks really good. I'm really interested to see how everything goes from here on out. Please keep us posted!
- Investor · Hopewell Junction, NY · Member since 2013 · 153 posts · 58 votes12y
@Jacob A. There was a question about mold that you missed.
Looks like there may have been water damage in the kitchen. Did you have a mold issue? What did you do?
Fingers crossed for more traffic now that we rounded the New Years corner.
- 12yJacob A.Investor · Raleigh, NC · Member since 2013 · 348 posts · 128 votesOP
Good catch, I missed that question. What you see in the kitchen actually turned out to be burn marks. Not sure where they came from or what happened in that house. There were a few very small spots of mold on the ceiling but no substantial amounts. They were disposed of properly by my contractor. When we replaced the roof we made sure to replace any damaged boards.
- Wholesaler · Arlington, TX · Member since 2013 · 59 posts · 29 votes12y
Congratulations on your first flip, it looks really great. Hopefully you'll get it sold soon. Best of luck in the new year! Are you working FT while flipping?
- 12yJacob A.Investor · Raleigh, NC · Member since 2013 · 348 posts · 128 votesOP
I appreciate the kind words. I am working full time while flipping (I'm a CPA with a local public accounting firm). My family is holding me back a little bit which is why I don't have any others going at the moment. The support of my family is big to me and I promised them I'd sell this one first before I started another one. So hopefully, I can unload this one in the next month or so and make some good money and then really kickstart things in 2014.
- Real Estate Agent · Charleston, SC · Member since 2013 · 424 posts · 99 votes12y
Jacob,
How did you finance the rehab assuming you used HELOC for the purchase? Do you mind sharing the details of the loan? The reason I ask is because I'm a young investor and do not have a home yet, I'm stuck with HML and do not have a home until I complete an FHA deal so I'd like to learn as much about these as possible before I get to that point.
Also, how did you find the property? I'd guess it was a foreclosure. I'm looking to do my first flip, hopefully not having to fix everything like you did, but have no idea where to start looking for deals and properties at the right price.
Regards,
Jason Eyerly
- 12yJacob A.Investor · Raleigh, NC · Member since 2013 · 348 posts · 128 votesOP
About 90% of the funds I used for this entire deal were through a HELOC that I obtained from a bank at prime (3.25% adjustable rate). I'm extremely lucky for my age in that I already have a lot of equity built into my home. The rest of the funds that I used were cash savings that I had sitting in a savings account earning about .00001% interest. Financing is definitely a big obstacle for a beginning investor. Basically you are stuck with two options being hard money and private money. I'd encourage you to get yourself educated to the point that you know the flip process backwards and forwards before you get into one and see if you can find a local private money lender at a local REIA or something that may be willing to partner with you.
The deal was indeed a foreclosure that I found on the MLS. I had a hard time finding much on the MLS though at the time and probably made 15-20 offers before this one got accepted. I'm now trying to work with a local wholesaler here that is using direct mail to increase the amount of potential deals coming through. If you have any more questions feel free to send me a PM, I'll be glad to share my experience with you and answer any questions I can.
- 12yAlton PhouvongBusiness MemberReal Estate Agent · MA · Member since 2012 · 13 posts · 3 votes
Great Job on the renovations Jacob!
- Lender · Houston, TX · Member since 2012 · 83 posts · 69 votes12y
That's a super job for a first flip! Congratulations on how it turned out. Beautiful!
- Chicago, IL · Member since 2014 · 710 posts · 200 votes12y
First, Great Job. I read the entire thread.
Not sure where your at with offers but I wouldn't get too worried about it not selling. You went on, on the worst time of year. Despite your agent saying Thanksgiving has nothing to do with it, it does. I actually probably would have not put it on until now and left it vacant in December. So I wouldn't drop the price until beginning of Feb if you have no offers.
Good luck!
- 12yJacob A.Investor · Raleigh, NC · Member since 2013 · 348 posts · 128 votesOP
I appreciate the advice. I was going to drop the price here at the end of this week but I think you may be right in that I should hold off until February. It's easy to panic when nothing is happening and especially when you are dropping holding costs into the property every day it stays on the market.
- surrey, bc · Member since 2014 · 15 posts · 0 votes12yVery good!! Sorry to hear about the vandalism. But sounds lime you will do really well! -Mike
- Boise, ID · Member since 2014 · 40 posts · 13 votes12y
@Jacob A. Sweet job on the renovations. I think its going to sell for sure here in the spring, but what about worst case have you thought about renting it out for a while 6m-1yr? I only ask because at some point with holding costs eating away at your $ every month your profit goes down. I see a few houses here in Boise that have had great renovations and they sit and sit and sit for months on end I drive by 2 of them every day. They still look great though to be sure, but I know someone is losing money on them just being vacant like that. Just curious if you had entertained the thought. But then it wouldnt be a flip! :-D
- 12yJacob A.Investor · Raleigh, NC · Member since 2013 · 348 posts · 128 votesOP
Thanks @Jesse Hyder
I have tossed this idea around in my head for sure. I haven't pulled the trigger on it for a couple of reasons. First, and most importantly, I do NOT want to deal with tenants at this point in my investing career. I hear horror stories and as a beginner I'm trying to limit my exposure to risk as much as possible. That's something I plan on getting over in the future, but for now I'm not in the business of renting. Second, I plan on getting very aggressive in selling this house in the next month or so. Third, my holding costs aren't breaking my pockets at the moment. Luckily, I've financed this property completely through a HELOC which I'm paying 3.25% on. It's not going to kill me to hold onto it for a couple of extra months and I'd rather go ahead and sell as soon as possible so I can get my cash out and move on to the next one as opposed to tying it up in a rental for 6 months. Sometimes it's better to just be patient and I'm hoping now is that time even though I'm cringing every day it doesn't sell. Thanks for the interest!
- Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes12y
Looks great! Congratualtions!!
Second City Real Estate4.821 Reviews - Saint Petersburg, FL · Member since 2013 · 39 posts · 3 votes12y
I am in the same position. House was a wreck, now it is best looking house in neighborhood but it is not selling since August. The rule of thumb that I know the property should be priced right. I always were selling slightly below market value and normally had offer within one or two weeks. I had walks away few times, once I was going through three contracts before property was finally sold in couple months. Current sale is abnormal because I decided to try the market and started with 150k when I should not go over 120k. After 3 months on MLS I took it off and planning to have it back on sale by spring time. The lesson learned that buyer is always right and wrongful pricing will shoot you in your feet. By my REA advise I was dropping price 2 months in a row and when finally got public interest I found myself in loss. I don't have a magic idea for you on best selling strategy, just share my experience to expand yours. All I know in general, if you are in investing business, your house should be under contract within couple weeks, otherwise we count bitter losses.
- Investor · Atlanta, GA · Member since 2013 · 212 posts · 107 votes12y
Jacob,
House looks good and based on the numbers you provided, you can still drop the price and make a very solid profit. It may be that your agent led you astray on pricing, given lack of traffic. Where are you priced relative to the two closest sold comps? In order to generate interest, my experience is you may need to be up to 5-10% under that to sell quickly. You came on the market during a tough part of the year (due to the vandalism) which was beyond your control but you need to do something to generate new interest. There's clearly no need to panic since you have great financing, but I might shake things up with a new agent or couple thousand dollar price reduction. Just food for thought.
- 12yJacob A.Investor · Raleigh, NC · Member since 2013 · 348 posts · 128 votesOP
@Account Closed
I appreciate the response. You are right I do still have room in the budget to drop the price. I do know that I have the house overpriced by about 5k, but at my agent's urging that's where we put it to have room to negotiate. We had an appraisal done and it came in right around 160 and the house is priced at 165. The comps in the area are pretty solid at that number even though they are nowhere near as nice as my house. I may have lost my best comp that sold in July since it is further than 6 months out now so that may hurt me some. I've had 4 showings now and zero offers so that tells me one thing, my house is overpriced. I find it hard to believe that 4 families could walk through that house and make no offers unless it was overpriced. Sometimes you just have to step back and try to take a unbiased view at things and I think you may be right. However, my thinking was that it's a terrible time of year to sell a house and that if do drop the price now it won't do me any good. I figured I would wait until about Feb 1 in hopes that the market picks up just a hair to generate some more interest. Atleast, that's my theory and only time will tell to see if it works.
- Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes12y
Jacob: are you sure it's not the lack of garage? Are you getting any feedback on that from agents. A buyer's agent will try to steer buyers to property like yours, even if doesn't meet their requirements, in hopes that the wow factor of the rehab will win them over. But a 4BDR household usually needs outdoor storage. I know you looked at 3BDR versus 4BDR comps. Were all other things equal (putting your fab rehab aside)? The 4BDR comps had no garages? No amount remodeling will make up for a bedroom or bath or garage if that what a family needs to buy.
- 12yJacob A.Investor · Raleigh, NC · Member since 2013 · 348 posts · 128 votesOP
@Account Closed
This is another problem I have had with my agent. The only feedback we've received is that buyers aren't too thrilled about the fact that it is on septic/well water and not city water/sewer. I hate the idea of having to go through an agent to hear what the buyer has to say. It's like that game of telephone when you were in elementary school and the words could have completely changed by the time they get to the end party. There hasn't been any feedback about a garage or lack of storage that I'm aware of and one of the top 2 sold comps does not have a garage either. Sometimes I wish I could just show up at the end of the showing and talk to the buyer myself. That would make things so much easier.
- Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes12y
I'm not sure what I would do in your situation. I've mentioned before that I don't have a lot of patience with slow sales and so I price things to sell, sometimes leaving money on the table, sometimes not. The last rehab retail prop I sold, two of the three best offers had cash for anything above appraisal. We knew going in that the appraisal would come in lower than asking, but so did the buyer's agents.
What's your MLS listing say about terms? Are you offering to pay closing costs? I'm guessing many of your prospective buyers are FHA with little down and very little cash for closing.
I know RE is local, but something is really bothering me about a great rehab just sitting there. Especially in an ok metro/suburban area. It's not like it's in the middle of nowhere.
- 12yJacob A.Investor · Raleigh, NC · Member since 2013 · 348 posts · 128 votesOP
@Account Closed
As I am writing this I finally got an agent to submit written feedback to some questions. They said there were well kept homes nearby, the price was "about right", the curb appeal was good and the interior was clean and well kept. The last question asks if their buyer is considering the home and the answer is "not sure". Atleast this provides me assurance that I'm on the right track. At this point I'm not sure what to do and maybe I can just chalk it up to the time of year. I plan on dropping the price and maybe putting something in the description about taking care of $1,000 of closing costs or something in the near future is nothing happens. I appreciate the feedback it is very helpful to hear other investors opinions on the situation.
- Rental Property Investor · AZ · Member since 2013 · 213 posts · 50 votes12y
@Jacob A. I'm sorry if someone else already suggested this, but what about offering a home warranty for one year? From what I recall, they are pretty inexpensive but can be a nice perk to a homebuyer.
- 12yJacob A.Investor · Raleigh, NC · Member since 2013 · 348 posts · 128 votesOP
@Account Closed
That's something else I thought about when we listed it. For some reason my agent advised against it and I didn't anticipate having this much of an issue selling the home. However, it's definitely something I will but in my bag of tricks for future houses and may consider looking into it on this one if it continues to sit.
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