Flipped an Old Victorian in Two Years - And Why I Will Never Do It Again.

[Janelle K. Eagle]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in San Luis Obispo.

Purchase price: $1,150,000
Cash invested: $300,000
Sale price: $1,628,000

Purchased off the MLS! This property had my heart from the moment I saw the listing, but it took A LOT of work and calculations (and LUCK!!!) to get it down to a price that would make the numbers work.

Built in 1890, this Old Victorian was converted into a duplex in the 70's by a talented architect who made some unique and extraordinary custom design choices (read Vaulted Sunlights) that make this property truly one of a kind. It will take a huge amount of work to upgrade the property which has not been properly maintained, so we'll be doing a lot of infrastructure rehab including adding HVAC/AC, upgrading the wiring, and bringing the old floors back to life.

As a Value-Add there is also the original carriage house that is a detached structure to the property that we'll be doing as a permitted ADU / Tiny House.

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

I saw the income potential in a college town and ability to add value. Between forced appreciation on general improvements on the property and the capacity to add an additional residential structure, the sky was the limit on value growth.

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

It was on the MLS! As a licensed realtor myself, I was able to waive my commission and negotiate the sale personally.

How did you finance this deal?

I rolled some funds from a previous flip into this purchase. I also HELOC'd my primary resident and then took out personal loans to fund the improvements.

How did you add value to the deal?

The property had a large amount of deferred maintenance. After repairing and improving the usability of the home, I was able to get it rented out at the top of market. I also converted the other side of the property (it's a functioning duplex) into an Airbnb / Short Term Rental.

What was the outcome?

Ultimately, I sold the property for about break-even because of personal circumstances that changed in my life. I now operate the Airbnb on behalf of the new owners!

Lessons learned? Challenges?

So many lessons. Get a floor plan drawn out BEFORE you start the work! All contractors and all subcontractors need the SAME set of plans and it saves so much time not having to measure and re-measure.

I personally will probably not buy a property this old or with this much deferred maintenance. Alas - I learned every step of the way about ordering materials, working with contractors, scheduling, insurance issues, etc. It was a MASTER CLASS!

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

I represented myself in the purchase as well as the sale!

[Rene Hosman]

Wow! Just from your one photo it has so much character! Do you have any more before/after photos you can share?

[Jana Crum]

Congrats on a great profit @Janelle K. Eagle! As an agent myself I'm interested in your negotiation strategy of waiving your commission. Were you a dual agent or solely represented yourself?

[Janelle K. Eagle]

Hi @Jana Crum! It was a really helpful strategy! I work for eXp Realty which allows you to have up to three "personal" transactions each calendar year in which you can waive your commission in a purchase or a sale. In this case, I represented myself on the purchase so the seller did not have to pay a buyer's agent commission - a savings of $25-$30K for them! 

[Janelle K. Eagle]

Quote from @Rene Hosman:

Wow! Just from your one photo it has so much character! Do you have any more before/after photos you can share?

Hi Rene! Thanks so much for your kind words. It really is SUCH a character piece!! The property is a duplex and the unit that is used as a rental is currently available on Airbnb and can be seen at this link: airbnb.com/h/thevictoriansinger