My first rehab in Orange County

Rehabbing & House Flipping
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My first rehab in Orange County

Jimmy Hong
Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes

Hello everyone, here are some pics from my first rehab experience in Orange County. Fortunately for my wife and I, we feel we were very fortunate to have a smooth experience and not too many major issues. It was a pretty full rehab, remove popcorn ceiling, new floors, completely remodel kitchen, remodel both bathrooms, scrape all the walls because we couldn't just paint over, take out partial wall from dining to kitchen. But nothing like Aaron McGinnis' "Sinkhole" property :).

I forgot to take before pics so I am using the stock mls pics of the place. I have to say the mls pics made the place look much better than it actual was. 1370 sq ft, 2 bed / 2 bath.

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Living room, popcorn ceiling, mirror above fireplace.

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Living room, broken mirrors on right wall.

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Dining room, more mirrors, did I mention this place had some mirrors?

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Kitchen, built in 70's style dining table attached to left wall. I think tile floors.

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Bathroom #2, they didn't show the shower on right but it was pretty bad. Again, this pic made it look decent.

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Bedroom #2, pretty standard, shaggy carpet, popcorn ceiling.

They didn't have pics of master room and master bath. Again, I forgot to take the before pics.

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  • Account Closed
    Real Estate Investor · Member since 2012 · 189 posts · 32 votes
    13y

    I used to think costa mesa was top dollar all over (since it's such a small area), until I took a closer look at a few of the properties (including condos) in that area. It's been a while, but I was actually surprised to see how low (being OC and relative to HB or newport) some of the property values were!

    well, in this market, I'm sure you'll do fine in recouping rehab if you were off a few dollars!

    good luck and let us know how it sells, DOM, etc.!

    0Reply
  • Jimmy Hong
    OP
    Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    13y

    Thanks Kelvin, I hope so. And I definitely will post when I sell, hopefully sooner than later.

    0Reply
  • Jimmy Hong
    OP
    Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    13y

    Hello guys and gals, just wanted to update the latest on my first rehab. After being on market for 22 days, I got 2 offers over the weekend and one of them is accepting my full asking price. I did a counter offer to buyer to cover the appraisal difference if it comes lower and she agreed and accepted. Very exciting to get this first rehab completed and sold. I purchased it on March 1st. I was very aggressive regarding the listing price, but I wanted to take advantage of this current market.

    Here are the numbers:
    bought at $297k (cash purchase so no financing)
    rehab cost $27,500
    Holding costs $1060 for 4 months (March - June)
    (hoa $235 x 4, util $30 x 4) = $1060
    closing costs around $3000

    Sold at $423,500
    Closing Costs:
    Title: ATLTA Owner's Policy: $1,075
    Sub Escrow: $250
    Reconveyance Fee: $75
    Escrow Fees: $1,047
    Deed Prep. & Notary Fee: $100
    Demand Fee: $0
    Prorated Property Tax: $1,613
    Doc Transfer Tax: $466
    City Transfer Tax: $0
    Commission: $20,116
    Pest Inspection: $50
    Termite Work: $0
    Home Buyers Warranty: $400
    Natural Hazard Disclosure: $125
    Homeowner Assoc. Transfer Fee: $450
    Cushion: $200
    Total Estimated Closing Cost: $25,967

    Net cash to seller $397,533

    I just wanted to thank biggerpockets and members. The podcasts, blogs, forums, and books were instrumental to this rehab.

    1Reply
  • Josh Farrer
    Midvale, UT · Member since 2013 · 60 posts · 10 votes
    13y

    Awesome overall post. Thanks for giving back with all the details and pictures. You are starting to join not on REI but awesome BP contributor!

    0Reply
  • Jimmy Hong
    OP
    Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    13y

    Thanks Josh Farrer, just wanted to do my part.

    0Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    13y

    Jimmy Hong WOW!! That's a GREAT deal.. maybe I should be looking at condos! Seriously, you can be proud of yourself for finding that and doing such a great job. One of the success stories for those wondering if it's possible to find deals in southern California. Congrats!

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  • Jimmy Hong
    OP
    Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    13y

    Thanks Karen Margrave, I am so excited, I feel like a little kid in a candy store. It definitely wasn't easy, I did a lot of research and reading. Wanted to learn from others and avoid common mistakes.

    0Reply
  • Jake Kucheck
    Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
    13y

    52.82% AROI is pretty sick for OC... congrats Jimmy Hong. Welcome to the club!

    0Reply
  • Jimmy Hong
    OP
    Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    13y

    Thanks Jake Kucheck, exciting to be here... now only if this club had a golf course...

    0Reply
  • Tim Wei
    Alhambra, CA · Member since 2013 · 6 posts · 0 votes
    13y

    Jimmy Hong, congrats on your first flip! you've done a great job. I am a newbie rehabber just like you, and I have also recently completed my first flip. Right now we are in the process of purchasing a few properties in LA (baldwin park and Monrovia), they are all in escrow, but since they are all short sales, we are now just waiting for lender approval. I was surprised that condos could generate that much return, in the future if you see any deals coming your way and you need funding, maybe I could help :).

    0Reply
  • Tom W.
    mia, FL · Member since 2012 · 43 posts · 3 votes
    13y

    Big Congrats to Jimmy Hong! Looks like a great freaking deal. I read thru the thread and not sure if this was posted somewhere else but can you give a little background on how you grabbed this deal and what made you look at condos. DId the numbers initially make sense or did you have prior knowledge to area?

    Either way good stuff.

    0Reply
  • Jimmy Hong
    OP
    Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    13y

    Hi Tim Wei, congrats on you first rehab as well. Maybe you can share your experiences too, I like to know how a rehab goes in LA. Yea, I wasn't only focused on condos, I just pursued the best property I could find. It just ended up being a condo.

    Hi W Tomsin, the numbers really made sense from the beginning. I paid $217 per sq ft and I knew with Orange County appreciation and lack of inventory, I knew I could sell for $300 per sq ft (sold it for $309 per sq ft)

    On answering you question, I was at the steps of trustee sales for about 5 months every morning and I knew how much distressed properties were going for. The winning bids on these properties were going way higher than what I projected them at. When I actually found this condo on MLS, I knew the area well enough, and immediately went after it with full confidence. If I weren't at the courthouse steps for 5 months, I might have hesitated and lost the condo.

    I thought I was wasting my time at the courthouse steps but it turns out I was learning a lot and prepared me for this condo.

    0Reply
  • Tim Wei
    Alhambra, CA · Member since 2013 · 6 posts · 0 votes
    13y

    Jimmy Hong, My first flip was actually an accidental flip, and it was in Vegas. My in-laws live in Vegas, and this particular house was basically in the same neighborhood, so we bought it last year in Sept with the intention of renting it out, but as the market heats up, we've decided to wait out a bit more and see if it would made sense to flip, so we finally put it back on the market in Feb and it was closed in early May. Purchase price: $133K, $1400 closing cost, Rehab costed $9K (it was a light rehab), and we sold it for $197K.

    As far as LA, I can fill you in as we get a few deals done, but we generally look for houses that are under $250K, with the market being so competitive, we often times have to offer way over the listing price, and 70% rule doesn't really work anymore in this market, realistically it's more like 75%, which can be a little bit more risky.

    0Reply
  • Jimmy Hong
    OP
    Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    13y

    That's pretty awesome Tim Wei, I am looking into Vegas for rental income right now but haven't found any. I'm not as familiar in LA market, to be honest, LA market kind of scares me. Comps could go all over the place in just a few blocks. But I do understand how competitive it is out there. OC is no joke.

    0Reply
  • Account Closed
    Real Estate Investor · Member since 2012 · 189 posts · 32 votes
    13y

    congrats Jimmy!

    had a few learning (for me/bp readers) questions for you if you don't mind my asking:

    1.
    When you purchased the property, what did you expect to sell it for (min, med, max prices)?

    2.
    What were your estimated costs before purchase?

    3.
    How much were you off for est vs. actuals?

    4.
    When did you purchase the property?

    I'm sure the current market really helped make more solid your original resell estimates! Again, congrats to a great success!

    0Reply
  • Jimmy Hong
    OP
    Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    13y

    Hi Kelvin K.,

    1. We (my wife and I) calculated to sell this property for about $300 per sq ft (x 1369 sq ft) = $410,700.
    It was first listed as $211 per sq ft (x 1369 sq ft) = $289,000.
    We paid $8000 over their asking price (had to outbid 6 other offers) for $217 per sq ft (x 1369) = $297,000.

    2. Estimated cost before purchase:
    Renovation $40,000
    Agent Commission at 5% $20,535
    Holding cost (cash purchase so no P&I) HOA & utilities - less than $2000
    Closing costs (title, insurance, etc) - $3500
    Total $66,035.

    3. Actual costs:
    Sold price $423,500 ($309 per sq ft)
    Renovation $27,500
    Agent Commission at 4.75% = $20,116
    Holding costs less than $1000
    Closing costs about $4000
    Total actual costs $52,616

    Difference estimated $66,035 - actual $52,616 = $13,419

    4. Property purchased March 1, 2013.

    Hope this helps.

    1Reply
  • Tim Wei
    Alhambra, CA · Member since 2013 · 6 posts · 0 votes
    13y

    Jimmy Hong, Las Vegas is a great place for buying rental properties, but I'd suggest that you know someone there personally, otherwise it could be hard to manage from OC. I had the advantage of my in-laws living there since 2005, so they know all the areas pretty well. Although we hired a management company to take care of our rental, it's still helpful to have someone close by to look at the property once in a while.

    You are correct that LA market can be volatile, but I guess the upside of it is that it seems there are always more people coming into LA than leaving, so you know the demand is always there. I try to always be conservative when running comps. Let me know whenever you decide to look into LA area to invest, maybe we could work together in the future. Good luck!

    0Reply
  • Jimmy Hong
    OP
    Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    13y

    Thanks Tim Wei, that's sound good. Looking forward to it.

    0Reply
  • Phillip Dwyer
    Real Estate Agent · Henderson, NV · Member since 2011 · 1k+ posts · 550 votes
    13y

    Awesome job and great post Jimmy. What part of the process did you find the most challenging? Is there anything you would do differently on the next project?

    0Reply
  • Jimmy Hong
    OP
    Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    13y

    Thank you Phillip Dwyer, I feel very fortunate that I didn't have major problems during this process. I would say that finding this property was the hardest, because of our low inventory market. After we (my wife and I) closed, we went full speed ahead with the rehab and then listing it.

    This has been such a ideal first rehab, I would be extremely happy if all my future rehabs were just like this. But I'm a realist and know that it won't be possible.

    0Reply
  • Amber Castro
    Real Estate Agent · Clovis, CA · Member since 2013 · 28 posts · 1 vote
    12y

    @Jimmy Hong youdid an amazing job!! I think it looks great.. so how much did you end up selling it for?

    0Reply
  • Amber Castro
    Real Estate Agent · Clovis, CA · Member since 2013 · 28 posts · 1 vote
    12y

    oops .. Just saw what it sold for.! good job.

    0Reply
  • Jimmy Hong
    OP
    Flipper · Irvine, CA · Member since 2013 · 349 posts · 45 votes
    12y

    Thanks @Amber Castro .

    0Reply
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