Wellesley Fix & Flip

[William Ladd]

Investment Info:

Single-family residence fix & flip investment in Wellesley.

Purchase price: $525,000
Cash invested: $365,000
Sale price: $1,070,000

We picked up a small 800 square foot, 1 bedroom house and turned it into a 4 bedroom 2800sf house at about twice the value.

What made you interested in investing in this type of deal?

We were flipping a house 2 doors away and the homeowner came to us with their little house for sale. It was a small cape on a small lot and we thought we could boost the value of our current property by also improving the ugliest house on the lot. We knew we would need ZBA approval to turn the little house into a big house, but we were only about halfway done with the current rehab so time was on our side.

How did you find this deal and how did you negotiate it?

The homeowner brought it to us. They wanted $550. We offered $525 with no contingencies and they agreed.

How did you finance this deal?

We put 20% down, 80% bank financing and we paid for the reno out of the profit's from the neighboring house flip.

How did you add value to the deal?

We tripled the square footage by expanding the basement and first floor off the back of the house, and by taking the roof off and adding a second story and walk up attic.

What was the outcome?

We made a nice profit off the project. The homeowner also paid us to come back and finish the walk-up attic, making that a large playroom.

Lessons learned? Challenges?

To no one's surprise, the ZBA is hard to deal with. It took over a year to get our plans approved. Once the project was complete we ended up buying another house in this neighborhood, and when we brought the ZBA the exact same set of plans they rejected it. We thought it would be easy the second time since we had a plan they approved of, but they denied us on the grounds of "that was then, this is now." We ended up just wholesaling that house, rather than go through the process again.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We listed the house for sale as an entry only on the MLS and worked with (and paid) a buyer's agent to close the deal.