My experience with a turn-key flip company
This post is a summary of my experience doing an out of state flip with a turn-key flip company. I am posting because there is very little information about this organization online and other potential investors should have some insight before they decide to try this.
The Back Story:
First, I have some experience flipping. My first flip was done remotely (Biker Bar Success Story). I've done a few at home as well, so I feel confident analyzing deals etc. A lender who I met on BP markets for a company in Illinois called Chase Foreclosure. They advertise themselves as a full service flip company for remote investors. They help you acquire properties (foreclosure which they sell or assign to you), manage the rehab, then list and sell the property. It sounded wonderful to me while I was managing my business from Asia & South America.
As part of my due diligence I googled them and found nothing. I searched BP and found one forum question. And I asked for references but was told they weren't able to give out contact info (red flag #1). I decided it was worth the risk to try one deal with them.
The Process:
The purchase process went okay. The lender screwed a few things up and no one communicated with me about delays or issues except for one stellar woman at the lawyer's office. Communication with Chase was also slow (48 hours for a call back, email response rare).
The rehab went more quickly than expected and stayed on budget.
I used their add-on services for lawn/snow care and what they call "quality control" which is someone who goes to the property every 2 weeks to take photos and inform me of any issues. The lawn care did their job, but didn't notify me when my contract was up so I thought my snow was being shoveled and it wasn't. The QC did send a report and make comments but failed to identify an active leak in the ceiling (a realtor spotted it during a showing!) and did not communicate the extent that the new paint job on the kitchen cabinets was peeling off.
The house was listed sooner than expected but it sat there for 3 months with 3 showings and no offers. The pictures were poor quality so I ordered professional ones. I called to discuss listing strategy and was told "it was a slow market". I did my own market research which showed that their listings sat on market an average of 6 months and sold 87% below list price. Meanwhile homes in my area were selling under 60 days at 97% of list. I fired them as listing agents and hired a new agent.
The new agent walked through the house and sent detailed pictures of the state it was in. Snow was not shoveled. The interior was dirty, paint had dripped all over the fireplace. The kitchen cabinets weren't painted properly and were peeling. Cabinet doors were installed badly. Basically it was not in good showing condition. The contractor did send someone out to correct the problems, but they still did a bad job, so I paid someone else to fix it.
Current Situation:
The property is still listed but at a lower price. It is getting more attention but no offers yet. The ARV was significantly incorrect and I'm facing a loss. I am considering holding it as a rental.
What I Learned:
- At each stage I was not protected by contracts. They did not represent me when I bought the house. There was no formal contract with the rehab contractor. Only when I listed was I a legal client. When I raised any issues it felt like they protected each other rather than looking out for me.
- The system is designed so everyone makes money along the way regardless of whether the investor does or not. That is a red flag as there is less incentive for them to ensure my success.
- No references is a big problem. I happened to run into another of their clients through my own networks and he was wrapping up two failed deals with them. He took a net loss and was very unhappy. He too was given a lot of excuses about why his deal was unusual and that the rest of their investors were making money. When I told them I had talked to him they assured me they had lots of clients who were doing well... but I still couldn't talk to them.
- If it sounds too good to be true, it probably is. I was disappointed that things didn't go well, I really wanted it to work, but I am happy if by sharing my own experience I can save someone else a loss.
Got Questions?
Feel free to PM me or post in the comments if you have other questions, or if you found this helpful. I'm always looking for solid deals and ethical partners!
https://www.redfin.com/IL/Lindenhurst/1903-Fairfield-Rd-60046/home/17743493
Keywords: Chase Foreclosure, out of state flip, remote flip, Bob Green, Christian Chase