Cat Litter House: Flip # 653 and it could be the worst one yet. Look at the pics and you decide.

[Brian Burke]

Some flips are easy...paint, carpet, clean, and list.  Then there are the hard ones. 

I've never posted a diary of a flip before.  With over 600 flips under my belt I sometimes think that I've seen it all.  Then I see something I haven't seen before.  This time, It's so outrageous that I couldn't resist sharing.  I'll share the visuals, but fortunately for you I can't share the smells.  This is kind of a diary and kind of not...I bought it in January so you don't get the day-by-day play-by-play, but it's not done yet so this isn't old news either.

I came across this deal from a wholesaler who I met on BP (thanks yet again BP for making me money).  He hadn't seen the house in person but he had heard it was in bad shape.

I sent my acquisitions guy down there to look at the house. When he came back he said, "that's the worst house I've ever seen." At first I thought "Come on, really? You've looked at over a thousand houses for me!" Ultimately, I took his word for it. We threw a number at the rehab and ARV and made an offer. It was accepted.

Here are the numbers:

ARV $400,000 (probably a little more, I hope)

Rehab $175,000 (probably a little less, I hope)

Since there were some unknowns I had to make a conservative offer.  It would take a while to fix this place up, so I had to add some margin to cover the carrying costs. 

My offer: $125,000.

Closing was about a month later.  The seller agreed to move out and leave the key at the title company.  On move-out day, I went down to the house to see it for myself for the first time.  When I opened the front door, this is what I saw.

Ok, so now I knew that my acquisitions guy was right!  We were in for it!

Have you ever seen anything like it?  Wait, it gets worse.  More to follow!

[Pat L.]

Our Building Inspector friend recently informed me of a large property with 2 homes (3 units) he has posted as uninhabitable. He knows we love to get them & clean them up with investor friends.

They had to remove & hospitalize the confused elderly woman & impound 4 large dogs who apparently had not been outside for some time (if you catch my drift).

I took a look at it & dry retching was the least of my immediate responses !!!  

I won't post pics yet as we don't have it under contract. But it's amazing how her kids (living locally) let this woman live in such disgusting conditions especially as they also control her adequate finances.

[Brian Burke]

Sad, isn't it, @Pat L. ?  Good luck with that one!

[Danny Owen]

My 1st post.. and I'm a newb. 

I just read that entire thread. Amazing stuff. Thank you for sharing. I wish you luck and hope you close soon. 

[Bradley Bogdan]

Wow, amazing work. I hope the sale goes through as expected, you certainly deserve it after that project! Thank you for sharing!

[Julian Jackson]

Wow @Brian Burke.  It took me a while to read every comment, but I am impressed.  I just became interested in REI and your struggle has been amazing.  Watching your steps, your mistakes, lets me see that you are always learning something new.  It's truly an inspiration.  I am going to my first REIA group tomorrow in Atlanta with open ears seeing even more knowledge!  Thanks again for keep us all posted with your housing activities.

Julian Jackson 

[Atchut Neelam]

with 600+ flips under your belt, this should be easy :-) 

[Joel Moore]

Very inspirational, Brian its nice to see people setting high moral standards. 

Any updates? Hoping you have fully closed.

[Brian Burke]

@Joel Moore we are expecting written contingency release tomorrow, and scheduled to close soon.  Stay tuned, I'll share the numbers once the money is in the bank!  Less than two weeks to go...

[Stephanie W.]

Just spent an hour reading the entire thread. I can't tell you how grateful I am, @Brian Burke, to you for taking the time and energy to keep us educated and informed on this process of yours. I've learned many valuable lessons for moving forward into my next REI venture... flipping. Aside from that, however, I'm left with a deep sense of sadness for my fellow human beings that can't find the way out of such horrific conditions.

[Brian Burke]

Glad this was helpful, @Stephanie W. !  On the bright side, I would suspect that your first flip will be a piece of cake compared to this one.  If it isn't, don't do it until you've developed more experience.  :)

[Daniella Ortiz]

Brian,

Great job!  Thank you for sharing.  I can't imagine seeing this in real life and it not breaking my heart...I would be worried that it would be a lost cause.  You made a masterpiece out of poop...literally!

All my best-

[BeBe Cheng]

Brian:

So amazing! Thank you for sharing.

I like to say this.  People who lives under this kind of condition mostly likely has mental issues.  We should have sympathy and understanding along the way.

Best luck!

[Charles Fella]

Ive read the whole post and love the transformation. But I keep wondering what kind of car was under that tarp?

[Toshia Booker-Blakeley]

For the truly Ambitious!

[Brian Burke]

@Charles Fella is was an 80s vintage thunderbird. I don't think it moved in over a decade!

[Charles Fella]

You said earlier in the post that you make the seller sign a contract which gives you rights to everything in the house. Did that include that car even though it was outside?

And was there cat litter in the car?

[Brian Burke]

Yeah, it included the car but like everything else inside and outside the house it had no value. Good question about the cat litter...I don't know!  I didn't look in the car. Just had the cops tow it away.

[Charles Fella]

How did you get the cops to do that? Did you report it illegally parked?

[Annette Hibbler]

I just spent nearly an hour reading this thread.  Wonderful transformation.  This is why my husband and I focus so much of our time acquiring and remodeling flips.  Some more than others.  But I know the feeling of pride when it's all come together.  You've staged it beautifully.  Thanks for taking the time to post the thread along the way. 

[Brian Burke]

@Charles Fella the city has an ordinance prohibiting the storage of inoperative vehicles in public view. We asked them to abate it for violation of that ordinance. 

Thanks @Annette Hibbler !  Watch this thread, in the next couple of days I'll be posting what everyone has been waiting for...the numbers!!!

[Brian Burke]

Finally, the moment you've all been waiting for!  Escrow closed today, and the numbers are in.

$525,000 Sales Price

- MINUS -

$125,000  Purchase Price

$185,327  Rehab

$13,752 Borrowing Costs

$4,562  Insurance/Property Taxes/Utilities

$26,250 Commissions

$1,356 Closing Costs (buy side and sell side)

$168,753  Net Profit

This one worked out pretty well, I'd say.  Someone asked me earlier in the thread if there is anything I'd have done differently.  The answer is YES, I would have done the air test before putting the house on the market.  I had an offer the first weekend it was listed, the offer was $540,000.  The buyer backed out when they saw the disclosures, but I think they might have moved forward if I'd have had that air test to show them.  That mistake cost me $15K in additional profit.  Live and learn, I guess, but it doesn't change the fact that this was a pretty successful flip.

I'm ready for another one of these!

[Ashley E.]

great job Brian!!!

[Stephanie W.]

Brian, it was great being a part of this with you! I learned so much being allowed to be a part of this process. I know it had to be tedious tending to all of us, but I know the work here was well worth it for everybody. I can't wait to jump into the next one! Thank you for allowing me to join in.

[Cheryl Rich]

Wow...this is amazing.  I'm glad I got to see it all in one sitting; I've learned a lot thru all the comments.  Thank you for sharing, Brian and the best to all!!

[Mark Elliott]

well, that about " takes the cake". i have seen some pretty rough ones out there, but this tops it. question for you........... did you find anything of value???.......lol. i have done one that was similar. it is amazing how people will live. kind of makes you wonder if the human race has evolved from the caveman days or not. you have to post the " after" picture too ya know