Sold! House flip $83,000 in Profit

[Tarl Yarber]

Hey Everyone! (all pics take before and after in same locations)

I wanted to share one of our recent success's with the BP community and hopefully help some of the newer rehabbers out there and give them some encouragement to keep going.

I bought this house in January earlier this year, its a Seattle based property on the south west side. This was by far the ugliest house in the neighborhood. We found the property via MLS as a Freddie mac home, after waiting for the first look to expire, we then had to battle with other investors to get the winning bid.

Our initial acceptance was at 175K, after inspection period we were able to re-negotiate surprisingly down to 165k. This usually doesn't happen here any more with banks since there is such competition here at this time (but we found extensive damage that was hidden such as the roof having three layers of roofing, the bottom which was cedar shake with ZERO sheeting at all).

Pre-purchase: 2bed/1bath 800 sqft finished living space with an unfinished 720sqft basement

After Rehab: 3bed/2bath 1520 sqft finished living space

Rehab consisted of: demo, re-wire entire house, move electrical panel and update, roof, siding, hardwoods installed, build new bath in basement, add master bedroom in basement, add washer dryer closet in basement, remove upstairs wall and add beams, remove addition in back and rebuild deck, fencing, landscaping, EVERYTHING, you get the idea.

This house did take a full month longer for rehab then anticipated, but it all worked out in the end.

The Bad: Budgeted 75k for rehab, ended up 88k, anticipated 60day rehab, took 90days, termites, no HVAC where we thought, Water heater was leased so it got removed after buying it (didn't know that), had to fire a contractor and have others fix his bad work, bath tubs were lain incorrectly and was not discovered until we were ready for tile...

The Good: House turned out WAY better than thought, the additional time for rehab gave time for neighborhood market to increase as well, low inventory at time of listing, sold in 4 days.

Numbers:  Purchase: $165k (CASH)

Rehab: $88k

Holding costs: roughly $2500

All selling/closing/realtor/staging/misc: $35k

Selling Price: $369,000 with no concessions

Net Profit roughly:  $82,556

[Tarl Yarber]

Originally posted by @Skylar Dejesus:

congrats! Can you further explain how you financed the propert? I.e cash, loan etc

Hey Skylar.  Sure!  This one was purchased all cash.  I know that some newer people may say "what!?, I don't have that kind of cash and cannot come up with 165k for purchase and then another 88k for rehab."  Well over the years I have developed a fund where we pool individual investors who just want a return on their money, throughout the year we pay that return in their trust accounts after the projects are completed.  That's how we did this one. More of an advanced discussion that maybe one day i'll post about.  Allows for all cash and complete control, and then we pay 10-15% on an ANNUAL basis to the trust accounts, we typically make 20-25% per project, and we turn the money on average 3 times a year, so if you do the math at 25% per project at 100k each project costs, that's 25K net profit, x3 projects a year equals $75k.  However we only used the same 100k three times from that one trust account that we only pay say 15% annually that year based on performance, so that's 15k to the "investor" and 60K to us at the end of the year.  Hope that makes sense.