I actually wrote this story last October and never posted it, but these same clients just put their third flip house under contract yesterday, so I wanted to go ahead and re-lease this story to lead into the next 2 which I will be posting about them over the next few days:
My clients, Halmour Properties - a mother / brother / son combo, recently had a successful house flip. I wanted to share their story for all of those who think there is no longer money to be made in today's market!
Purchase: I searched for houses for them for approximately 60 days prior to finding the perfect house for their flip. It is very important in today's market to look for a house which can be renovated and sold for a profit at the average sales price for your area. In Hartwell, right now, the houses selling are not the higher priced Lake Homes, but those homes in the $80-90,000 range. Halmour was looking for a house that could be purchased and renovated for less than $60,000.
We looked at the house on September 6th. It was a 3 bedroom / 1 bath brick home on .65 acres of land directly across the street from the Hart County Middle School. It was in very good structural condition, but there was no HVAC, the hot water heater and appliances were missing, it was dirty, the yard was overgrown, the carpets were horrid, and the paint colors were extreme (hot pink, dark hot pink, dark brown, deep bright yellow). It was listed at $55,500, and had been on the market for six months. They made an offer to the bank of $38,500 - which was accepted. The property closed on October 7th.
Renovations: To their amazement and good fortune, the investors found many special touches which had been hidden. For instance, they found hard wood floors in great shape beneath all of the nasty carpets, and well-done rock work around all of the landscaped areas beneath the long-ingored plant life gone wild. They were able to use these items to their advantage. They had planned significant changes to the home such as: adding a second bathroom,removing the wall between the kitchen and living room area to open it up, adding on to the back deck, and installing a kitchen bar area. But it turned out the most extreme changes they had to make involved removal of the in-the-wall heaters and repair of the remaining holes after installation of a central heat and air system. Their repairs totalled $7,100.
Sell: The reason they didn't end up making significant changes was: I put it under contract on October 10th to a family who requested they make only the most necessary repairs and sell it to them. The family has a daughter who had just started middle school. They took one look at the property, and put it under contract. They wanted to keep their total payments in the $525 per month range. It closed on October 31st for $72,750. Their monthly payments, including escrows for taxes and insurance, total $533 per month.
Halmour agreed to the contract because they knew they could have made the changes and sold the home in the $90,000 range, but it would have cost them that much more to make the changes. As it worked out, they were able to spend the least amount of time and still create a good profit while feeling proud of the home they sold.
Bottom Line:
Purchase Price = $38,500; Repairs / Commissions = $7,100. Total Investment = $45,600.
Sales Price = $72,750. Total Profit = $27,150. Total time to flip = 24 days.
What they Learned: They said what they learned mostly was the order in which to make repairs! Also, to keep a running board with the day's tasks listed to be checked off. Apparently the two investors re-did a lot of work because they were not communicating well. For instance, one prepped the bathtub for refinishing, then the other came the next day and scrubbed it - requiring another prep of the tub before refinishing. One prepared the trailer for a dumpster run, the other came in and filled it with brush from the yard clean-up. They both cleaned the windows; they both cleaned the ceiling fans; they both mopped the same floor and forgot about another, etc.
As their agent, I was very proud their flip worked as well as I told them it should. Another option for investments in this price range is to rent it for a couple of years before selling it during the next strong seller's market. I also do property management and leasing, so I had prepared them for this option. In this instance, they did not have to wait. We are currently looking at two other homes which they hope to rent and / or sell in this same manner.
Are you interested in making a 60% profit in a month's time? Call Julie Haley today . . . I will set you up and we will work to make your goals!
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