Rehab the house. Subdivide the lot. Build a spec home. Repeat.

[John P Becker]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $280,000
Cash invested: $214,000
Sale price: $535,000

This may not look like a good flip based on the numbers but we bought this house because it had an oversized lot for the area and we were able to subdivide the lot. This inflated the rehab costs but we were basically able to walk away from the deal with a little bit of profit and a free lot. We are building a house on the lot and when it is done we expect this deal to be one of our best yet. Now we have the experience and knowledge to do it again which we are doing. We bought a duplex around the corner and we are in the process of subdividing that lot. This time we are going to keep the duplex as a rental.

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

This was an off market property that someone brought us and at first we weren't super interested because it was a little outside our investing area. It was in a good school district though and like in the description we realized we could subdivide the lot which was something we had never done before so we decided to give it a shot. Deals were very hard to find during this period.

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

An estate attorney who we did a deal with before brought this property to us. We negotiated for a little bit and came to a standstill. They eventually came down and we came up a little and we got the deal done.

How did you finance this deal?

We used a conventional non owner occupied mortgage with 20% down.

How did you add value to the deal?

We added value by recognizing that the lot could be subdivided which I don't think most people would have realized. I actually didn't realize it my partner did.

What was the outcome?

We had a successful flip and walked away with a free building lot.

Lessons learned? Challenges?

We went over budget like most people do.

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

My partner and I are both investors and Realtors.