Luxury Home Advice

Luxury Home Advice

Real Estate Investor · Lakeville, MN · Member since 2008 · 153 posts · 17 votes
Happy New Year Everyone! Yesterday I went to see a home that a wholesaler called me about. It's in a very nice section of town with great schools and lots of luxury homes. The house is new construction and the person who built it just ran out of money. All the big stuff is in place and the drywall is up. I would just have to finish it, including painting it, adding some flooring, a lot of fixtures (toilets, vanities etc.), and put in a kitchen - I'm guessing about $100K to do it right. The asking price is around $300K. I am getting all sorts of estimates for the ARV between $525k and $700K. I'm wondering if anyone else has done this before and how did it go? I have flipped 5 smaller homes and duplexes before, but have not taken on a project of this size. I realize comps are harder to figure out at this high end, but I would appreciate any advice. I can raise the funds to buy it and fix it up, but I am trying to determine if it is worth it. Thanks.
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  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y

    Who owns it, a bank, lender, builder going under, homeowner with second thoughts?

    You'll need a better value, but say it's 500 ARV, 120 days on the market. Consider holing costs!

    Offer something like 250 on 300, you take everything up to an agreed price like 400, then split amounts over 400 50/50. If the seller thinks it will blast at 600+ get gets much more than expected, you limit your risk and still come out great.

    If holding time goes past say 120 days, start price reductions, pay holding costs first.

    Another builder or homeowner should go for this type of deal, I've done it on uncompleted projects, limits my risk in higher priced homes/properties. Banks may agree as well instead of dipping the price so long as you can show the ability to get it done. A foreclosure probably won't fly this direction. Good luck. :)

  • Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    12y

    Have they paid all the sub contractors ? if not are the subs holding up inspections What about the permits , what stage are they in and whose name are they in ? Were the rough in inspections done? There is a bit more to it than just finishing whats there

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y

    Yes, there will be a lot of due diligence with an unfinished property.

    @Hal Cranmer

    Who owns it now?

  • Real Estate Investor · Lakeville, MN · Member since 2008 · 153 posts · 17 votes
    12y

    It sounds like the owner owns it and it is paid off. I think he sunk all his funds into it and ran out. Some company apparently 'repossessed' the kitchen cabinets when he couldn't pay for them, so I'm guessing there may be some other liens to be concerned about. I have a very good title agent and will definitely be purchasing some title insurance.

    My sister-in-law will be going out to the property with her project manager tomorrow. She is an interior designer for a company that builds high-end basements in luxury homes. They are going to give me an opinion based on what they find.

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