Investment Info:
Single-family residence fix & flip investment.
Purchase price: $157,000
Cash invested: $150,000
Sale price: $427,000
Hey guys this was the absolute worst house I have ever seen and it turns out to be one the most profitable deals in my career! Read how I purchased a hoarder house at a big discount and transformed it into a high end luxury home that sold for over asking price making me $80k+ in profit in the process.
What made you interested in investing in this type of deal?
The home was in such bad condition that there was a lot of room to add value to the property. There was trash piled waste high in every room and hallway of the house. The sellers needed to sell fast so they could buy an RV and escape their current environment.
How did you find this deal and how did you negotiate it?
This was a website lead. The seller filled out a form on my website to get an offer to sell their home. I visited the home the next day and prepared an offer to purchase the home for cash.
How did you finance this deal?
I used several sources for financing this deal and none was cash out of my own pocket. I used a commercial bank to finance 80% of the purchase price. I used a HELOC for the 20% down payment. I used a private lender (another real estate investor) to finance the $150,000 rehab costs.
How did you add value to the deal?
Completely gutted and renovated this home down to the studs. It took 8 dumpsters to empty the trash that had accumulated in this house. New kitchen. We opened up walls to open the kitchen up and moved the basement steps. We turned one of the upstairs bedrooms into the master bathroom with a walk in shower and soaking tub. Added a bedroom and full bathroom downstairs. Regraded all of the landscaping and planted new shrubs and trees. New roof and siding. Staged the home.
What was the outcome?
The outcome was awesome. I ended up listing the property for $399k and got multiple offers and accepted an offer for $427k. After spending $150k in rehab costs I netted over $80k in profit from this deal.
Lessons learned? Challenges?
One lesson learned was to always check in on the contractors to see how they are doing or if they need anything. There were about 2 months during this project where very little got done because the contractors were working on other jobs.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Yes I would highly recommend First State Bank. They lended on the purchase price without needing an appraisal of the property. This property was a hoarder house in really bad condition and would not be favorable on an appraisal.
