Distressed sellers Sub-To turned into a Fix N Flip
Investment Info:
Single-family residence fix & flip investment in Colorado Springs.
Purchase price: $226,000
Cash invested: $80,000
Sale price: $336,000
This was a Fix -n- Flip. We were able to do it on a Sub-to. Sadly for them, the couple was divorcing. Much cheaper than Hard money. House was in Rough shape so we Updated/Remodeled the interior. The kitchen was recently updated so that helped lower costs. New roof before closing as well. Did very well. We didn't do the yard as its common in this neighborhood and the market was soo hot it didn't matter. Still went 21k over asking.
What made you interested in investing in this type of deal?
I knew I could sell it easily in my market. I initially tried to help the sellers get it fixed up prior to selling. I even found a contractor who would carry some of the rehab costs until closing. Didn't work out.
How did you find this deal and how did you negotiate it?
They were former clients of mine but were, unfortunately, getting divorced. The house was in bad shape. (worse than the before pics I shared)
How did you finance this deal?
Sub-to & Partner.
How did you add value to the deal?
Rehab and was the Listing agent.
What was the outcome?
We sold it and made about 60k net.
Lessons learned? Challenges?
The biggest thing I learned was, I am an agent and in this situation, I could have explained early on what the sellers could net in the current condition and explained all the buyer pitfalls. Simultaneously, I could have offered to buy it on a sub-to right away. In my opinion, they actually made more with the sub-to in as-is condition than they would have with a traditional sale, after you add fees and commissions etc. Not even including if the buyer asked for anything.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I am an agent. But I did this solely as an investment. Disclosed in writing to the sellers upfront.
