Summary

• Property took 1 year to sell
• Property went under contract 3 times with different buyers
• Winter freezing temps - water pipe burst ruined our renovation and we had to start all over again

What We Should Have Done

• Don’t create your own comps when evaluating – pay attention to specific neighborhood not 1 mile radius.
• Winterize property

PAY ATTENTION IF YOU ARE USING HARD MONEY LENDERS – I used cash to buy this property hence my downside and losses were limited. New investors using hard money lending and various other short term lending to fund flips be careful and keep in mind situations like this are possible and you may have to cover interest for several more months than originally budgeted and perhaps you may go negative on the deal if you don’t budget properly. Unforeseen situations such as buyers bailing on the deal or lenders not qualifying buyers are out of your control and will delay the sale of your house by months as was seen in this deal. I have done over 15 deals and this was the first time it has ever happened to me that is why I wanted to share it so other may learn from it.

September 2016

We bought this bank owned short sale 5BR 3BA SFR in Locust Grove, GA in September of 2016 from an agent we did several deals with in the past. My agent's client had this property under contract for over 6 months, as typical short sales are a lengthy process. The agent's client no longer had the patience to wait on the banks approval so the agent contacted me and asked if I was interested. Since I was in no rush I decided to put the contract under my name. We told the bank I am a cash buyer and was ready to close. Within 30 days of being under contract I was able to close on the deal for $100,000. The deal sounded amazing a 5BR house for $100K! It seemed like a no brainer. Initially I was going to turn the property into a rental, which I could get about $1,250/month for however at the end I decided to flip it. The house was not in bad shape it was just trashed, it was a newer construction home built in 2005. The property had been foreclosed on and was vacant for 3 years. My plan for the property was to cosmetically upgrade it nothing structural.

We updated all the bathrooms (new tiles, vanities, fixtures), new carpet (bedrooms), laminate flooring (living room), painted the interior, added granite counter tops throughout the house, new SS appliances etc. We did a visually appealing cosmetic upgrade and put the property back on the market. The updating took us about 4 weeks to complete which put us now around the November 2016 time-frame of when the house first hit the market.

November- December 2016

Our comps in the same neighborhood were between $115K-$135K. We did not pay attention to the comps in the same neighborhood and looked at comps within a 1 mile radius. This gave us higher comps and we decided to initially list at $175K. The reason why we did not pay attention to the comps in the neighborhood was because we had the biggest house in the neighborhood all the other houses were 3 and 4 bedroom homes. We were the only home that was a 5 bedroom. Additionally all of the comps that were available were for non upgraded homes. We thought that since we had the biggest home and the most updated we could push the comps. WE WERE WRONG!

Our full cosmetic upgrade on the property only cost us around $13K. We were all in on the property for $113K.Our initial list price of $175K looking back was crazy! Keep in mind we also had a few other factors working against us that we should have kept in mind. We were in the November time frame during listing live, usually a slower period for real estate. The property got showings and got offers however the offers were coming in around $140-150K. We rejected those offers and laughed at them. We were now in the December time frame and the house was still sitting on the market and we started to do price drops. We got to about $169K listing price by end of December and still did not have it under contract.

January 2017

We are now in the 2nd week of January time period, and we were experiencing below freezing temperatures. We did not winterize the house and boy did we learn our lesson! A water pipe burst and flooded the entire house! Our brand new remodel was all ruined! The new laminate flooring, carpet, bathroom vanities,etc.

Luckily we had insurance and the damage was covered under our policy. We filed a claim with our insurance company and had to remodel all over again an entire section of the house! This process took a little over a month, which included the water remediation company drying and dehumidifying the premises.

March 2017

We are now in the March 2017 time-frame. We get the house all ready to get listed again and it hits the market at $169K. We are excited that we are in the prime real estate season! The property gets interest and goes under contract for the first time around May 2017. We go through the typical due diligence and the buyers get past the due diligence period. About 20 days later the buyers back out! Supposedly they were engaged and within the time-frame they went under contract they decided to break up. They lose their $1,000 earnest money and we get to keep that. We are back to where we started.

June 2017

The property goes back on the market June 2017 at $159K.There is some interest it goes back under contract, the buyers do their due diligence everything seems to be good however about 3 weeks in we find out the buyers cannot prove to the mortgage company their cash deposits in the bank and the mortgage company disqualifies them. They try to get other loans however the unverifiable cash deposits were an issue they could not get around.

July – September 2017

The property goes back on the market end of June 2017 for now $155K. The property goes back under contract with new buyers in July 2017 for $155K (Perhaps 3rd time is a charm!). The buyers go through typical due diligence everything is good EXCEPT the appraisal comes in at $145K. I am shocked at this point, I appealed the appraisal went back and forth however I did not win the appeal and accepted the $145K appraisal price. The buyers were using a government down payment assistance program for the loan, which took a while (45 day), and the loan was scheduled to close in September 2017. After 1 year we finally sold the property! We still made a small profit despite the 1 year delay, learned a few things and have a story to tell :)

Images of the project can be seen here (click here) > Final Rehab Images

 If you have any questions regarding the project let me know, will be glad to answer for you. Also leave a comment if you can relate and had a similar nightmarish experience of your own.