Flip-Rental Hybrid

[Travis Washington]

Wanted to share my first flip deal. My wife and I were able to find a short sale property listed at $17K. The house was in great shape, no major rehab needed at all, renters in place, only 19 years old (built in 1997), and assessed by the county at $92K. Complete steal! We reached a final sales price with the bank at $24K plus $9K in closing cost (the short sale company advertising the property charged an absurd fee of $5K). We were all in at $33,984 with an appraisal that came back at $51K. We were able to secure the house with a 5/1 ARM at 3.65% that included all of our closing cost wrapped in! So we essentially were able to purchase the property with no money down! Now the process did take four months (as those who have dealt with Short Sales know the pain) and during that time the renters that were in the house were evicted. They happen to leave a lot of their possessions in the house and after our inspection and appraisal they broke in and took the washer and dryer among numerous other items. Since the W/D were included in the sale, that resulted in an additional $400 for us at closing as reimbursements. So that actually turned out to be a good thing. We finally closed the deal four months after our initial offer and the day after our closing we had an offer to buy at $55K! Literally 20 hours later. Now, given loan regulations the buyer has to wait three months until he is able to buy the property. So, we met on terms where he will rent the property at market rent until he's able to purchase. In the terms he put 4.5% as a down deposit to secure the deal where if he doesn't continue with the deal after three months, that money goes to us but if he buys it goes toward his closing cost.

So in a eight month time, my wife and I stand to upwards of 10,000% ROI. Three to four months of renting meeting the 2% rule and then a solid flip of a house that needed no rehab work. The deal came with some headaches but it was definitely worth it and has given us the greatest motivation moving forward to our next deal! Thanks BiggerPockets for all of the info and resources that help make this deal for us property