The average scary house - total rebuild flip #2

[Paul Meyer]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $56,000
Cash invested: $115,000
Sale price: $230,000

Another really ugly house - more on the inside then outside. When I bought it I thought I was just going to have to replace 25% of the total subfloor - well of course I replaced the entire subfloor, plates, girder, all interior walls, all new systems include well and septic. It would have been a scary house for anyone to timid to put in the work. Over 7 months I transformed it into the nicest home on the block. In this house I basically "over valued" the work so I didn't get $250k only appraised for $230k. I didn't fight it because when I did my own comps I was thinking $200-225k sales price so its fair. Buyer is getting one hundred percent new house. Still cheaper in my opinion then demo and building new. After taxes this nets around a $30k profit which isn't anything to get an ego about but its a money brick to put in the bank. Lets just say I learned to brace the house on the next one that cost me $6k using a house moving company to move house 3 inches back. Now I know who to call.

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

Price and availability. Everyone else was to scared to buy. Entire inside floor was caved in. Walls were hanging from ceiling joists. Yeah!

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

Auction. Not much negotiating.

How did you finance this deal?

Equity loan.

How did you add value to the deal?

Rebuilt entire home with full new custom floor plan adding a 2nd full bath and tripling size of kitchen opening out to back yard giving it more light throughout home. Everything was an upgrade turn-key. Not cheap. All city approved!

What was the outcome?

Took a bit longer than expected thought 4 months ended up being 7 months. Finishes are typically fast but my drywall messed up so it took me another month to refinish it for paint 2x. Rebuilding entire floor/walls really only took a month. Wanted to earn more but I take what I can get and move on to next project.

Lessons learned? Challenges?

Brace skeleton walls MORE. Costly if home shifts. Whoopsie.

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

Not really.