Bilevel to Modern Farm Style

[Jeremiah Noll]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $65,000
Cash invested: $160,000
Sale price: $219,000

Found this deal on market because a buyer made a low offer but did not accept the counter. Partnered with an investor to renovate and resell this house with a very rare view in this area. We created a one of a kind house but were ultimately held back significantly by the appraisal.

What made you interested in investing in this type of deal?

I think the best flip opportunities are present when there is something special about the location or style of the house. This one had a fantastic view.

How did you find this deal and how did you negotiate it?

A buyer offered $60k and it was countered at $65k. That buyer couldn't see the upside, but I could. So after he rejected the offer I found an investor to partner with to take this deal down at $65k, cash, as is.

How did you add value to the deal?

We added a florida room and deck in the rear to capitalize on the awesome view, then proceeded to fully replace the kitchens, baths, and convert a family room into a master suite. New roof and then after hitting the market it was clear we needed some curb appeal so we improved the landscaping.

What was the outcome?

We had a full price offer at $275k, but the appraisal came in at $181k. We lowered the price to find a new type of buyer and a few weeks later found one at $219k and the house appraised at $219k.

Lessons learned? Challenges?

Many appraisers comp with only the same style and cannot put value on aspects as buyers do. The magnificent view was valued by the previous appraiser at only $10k. Nobody who knows the market would do that, but appraisers are held to standards which restrict them from determining actual market value. A combination of these factors led us to losing $55k of profit on this flip.