New Flip Blog: We're Adding 1,055 SQFT: LA (Jefferson Park) Home

[Shawn Ward]

Hello BP Community! As many of you know, I created a blog for one of our recent flips in South Los Angeles with weekly updates. That flip was very successful as we completed the rehab in 11 weeks, had multiple offers and from purchase to close was only 4 Months. As some of you know, we are very creative and artistic when it comes to our flips and we perform upgrades that are not advised on the BP Podcast and many forums (we put colors on and inside our homes and fixtures that are very design-oriented....and not everyone will love it, but the few buyers we do attract REALLY love it) so it should be pretty interesting what we do on this flip.

My partner Zerik and I are now starting a new flip that I feel would be very interesting for BPers to follow, as this one is not your standard rehab. Why?

1. It's a little tiny ugly house: 672 Sqft

2. We are adding 1,055 Sqft

3. We are demolishing an entire garage and storage shed

4. We are getting multiple permits with the city of LA, which can be a huge headache

5. The home is in Jefferson Park and is in an area that is HPOZ (Historic Preserved Overlay Zone) which means there are only certain cosmetic changes we can make to the front of the house.

6. Marrying the old structure to the new one may be a bit tricky

With that said, with all of the moving parts and extended timeline, I will be posting Monthly updates instead of weekly. As before, please feel free to send any questions you may have. 

Here's the deal:

ACQUISITION PRICE: $469K

REHAB BUDGET: $227K

ARV: $935K

TIMELINE: 32 Weeks to finish (8 Months) - We are being very conservative due to LA's reputation with permits...however, we hope to finish in 6 months. 

FUNDING: We are using a Hard Money Lender in addition to private funds for our portion of the acquisition, a portion of the rehab and holding costs. 

The home BEFORE images are below. 

I will have my next update in 30 days to show what we've accomplished and updates on the rehab, timeline and budgets. 

Thanks!

Shawn

[Shawn Ward]

Well...some progress with the HPOZ ladies and gentlemen. We've met with the planning office twice and met with the Board for two consultations. The architect has been awesome! They have also acted as an expediter during the process. I must give them a shot out...even though they do not know...but it's Tracy Stone Architects. 

So, after the meetings and the board consultations, we are now as they say "ready to proceed to the approval process." Which means, we should be able to continue our rehab in 75 days. Go figure. 

Details:

REHAB (images below):

• Will continue after formal approval in 75 days. 

TIMELINE:

• We are in Week 27 of 32 in Rehab
• We are 4 months behind schedule now due to the HPOZ delays

BUDGET:

• Due to the delay, we are on rehab budget, but our hard money mortgage payments are adding up, so our profit margin has declined significantly. We should still be able to make a profit 

SELL:

• Due to the delays, this home may not go on sale until the Fall 2018. It was originally planned to go on sale May 2018.
  

NOTES:

The only thing that is saving us on this deal is:

1. We built a very large margin of profit so at worst, we'll make at least $40K

2. We have 2 other flip projects and a soon to be 3rd to fill the gap of the delay

I hope you guys are doing better than this deal!

Shawn