Multi-million dollar flip to ourselves

[Alma Mills]

Investment Info:

Single-family residence buy & hold investment in Los Angeles.

Purchase price: $1,640,000
Cash invested: $300,000

We bought this SFR distressed and with the old owner in bankruptcy. We bought it will a hard money loan that included purchase and $350,000 in remodel funds. Part of our challenge was they only wanted to give us 1 year for the bridge. We had serious challenges with our contractor and eventually were forced to fire him and GC the rest of the project by ourselves. We were blessed to be able to refinance out of the bridge loan about 14 months later (with two month long extensions). Our new lender asked for 2 appraisals and they came in at 2.835 and 2.85 million, much higher than expected. We are still working on the landscaping and pool.

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

We lived in our 4 unit property for many years and wanted to finally have a yard for our kids and some space. We like the area and feel it will increase significantly in value in the future.

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

MLS listing. Seller was in bankruptcy and needed a all cash out no contingency offer. Had to close on 3 weeks . Our agent was friends with the listing agent so that really helped on this one.

How did you finance this deal?

Used a hard money fix and flip type lender who would only lend to seasoned investors. Paid 10% down on purchase and remodel costs.

How did you add value to the deal?

Well the old house had no heat, 5 bedrooms and 1 bath on the 2nd floor, closed concept kitchen, servants stairs, awkward 3rd floor and many other issues that we fixed.

What was the outcome?

Refinance in Jan of 2023. Paid off bridge loan Built pool and sport court in Spring and moved into the property.

Lessons learned? Challenges?

Don’t go to cheap on your contractor or you will suffer.

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

Eileen Lanza our realtor did a great job for us