Live in Flip mixed with BRRR

[Matt Jones]

I bought this overgrown house in a very nice neighborhood that had been sitting vacant for about 4 years.  Somewhere in the process of the bank trying to sell the home the bank had a water issue that damaged drywall and ruined sections of the hardwood.  I stumbled onto this house when the price dropped from $249k to $225k, it had been originally priced at $325k 10 months earlier.  In the process of negotiating with the bank they decided not to make repairs and were so difficult to deal with that they ran off the other potential buyers.  After dropping the price to $225k there was a multiple offer situation but through the banks flip-flopping on terms and taking forever I was the only buyer that stayed interested and I picked the house up for $205k.  Immediately after close I started on sheetrock and floor repair, a contractor said he could sand it and make it all match and eliminated the warping "no problem"

Sheetrock repair went great.

But he ruined the flooring which resulted in having to rip out all of the hardwood.  Hardwood Glued to the subfloor is not fun to remove. To save money I decided to do the floor removal myself and after having a ton of trouble I came across a strategy that worked.  If you are removing stubborn hardwood that is glued to the subfloor and nothing else is working... set the blade depth on a circular saw to the depth of the flooring and cut the flooring into 1ft squares.  To make it even easier you can mix adhesive remover with water and pour it into the cracks.  If it comes to this, obviously, there is no salvaging the existing hardwood.

I used a hand scraped engineered hardwood for the new flooring, painted the entire interior and exterior of the house, landscaped, replaced the $500 range hood and a few appliances and the final result is in the pictures below.  Bought $205k, improvements $25k, sales price $288k less $19k seller concession and real estate commission.  The renovation took about 4 weeks and I lived there for 2 years so I am not including holding costs on this one.  While living there I pulled out cash to flip a home and buy my first rental property, a quadplex.  Both were $50k plus renovations and are detailed in my other posts.  Overall this made a great place to live and I made a few tax free bucks for my effort.

Thanks for reading!

[Matt Jones]

I looked at it like a flip but didn’t include holding costs because I would be living there as my primary residence.  Purchase price, $205k I put 5% down and financed it for 30 years at 4% with Regions.  I spent $25k fixing up during the time I lived there, only about $10k of that was right away and I probably spent an extra $5k overall because I lived there and did a few things I wanted to do that weren’t necessary.  

Basically the goal was to find a good deal that needed cosmetic work and would be worth more than what I paid for it as soon as I did that work. I bought it with a 30 year conventional loan and paid about the same as if I had rented a smaller house in a worse neighborhood. After that you have the equity to tap through a HELOC if you want to buy an investment property, you can sell it and get your cash or you can just live there and enjoy the lower living expenses.