House #4 in CT Success... or Not

[Brian Pulaski]

Just closed on this house yesterday, so I figured it was time to share. Although I titled it a "success", I can honestly say it was not. The length of time owning the home, along with the hours invested, which caused me to miss time on other properties makes me feel like this is actually a loss. Once again there were lessons learned and the ultimate goal is to improve after the renovation is done.

This house was MLS listed and didn't really catch my eye. It is on a busy state road, no garage and most of the property was in front leaving a small/nearly no back yard. With that said I ran some numbers and on paper it looked like it had potential. The home is a 3/1 ranch, with 1182 SF. It was listed at $110,000 but didn't catch my eye until that dropped to $90,000. We viewed it, along side other investors and I crunched the numbers. The budget spreadsheet said purchase at $98,752.00, renovate for $58,415.00 and sell for $195,000.00. After all in costs should net roughly $29,000. The actual numbers came below:

Purchase: $98,752.00

Renovations/Holding: $79,211.54*

Sold Price: $207,500.00

After Closing Costs Profit was $24,066.10... with the caveat that it was a combined effort with my father and the split was $12,033.05.

Long story short, the house was purchased in Nov 2015, worked on between 3 other houses I had/have, and sold in March 2017. When I factor the amount of hours I have into it, this house was a complete dud, but a lesson learned.

The biggest lesson learned, is one I never wanted to learn. I avoid septic homes at all costs. I do not like the unknown with them, and where I am, you need to be a cash buyer with no contingencies to get the property (or at least that's the only way I have been able to). We completed the house, locked it under contract and sure as can be... septic system failed. We had a couple weeks in the winter to have it replaced, and even with my father doing a lot of the work (crushing the old tank, grading, seeding, etc...) it cost... $12,100.

Original profit would have been $36,166.10, which still not great, would have landed me better than originally expected. After the septic hit, I was happy to get this house off my hands and focus on the next one. The biggest lesson here was we should have splurged the $300-400 for an inspection the day we got the keys, which would have had me avoid some costly spending during the project (did a lot of extra stone work because we were doing well on budget and ARV was looking better) and made the hit more bearable.

With that said, on to the photos:

Before:

[Brian Pulaski]

Final Lessons Learned:

1.) Septic Stinks! Test and confirm this before buying, during buying,  or day 1 you have the keys. One guy told us $4,000 if we supplied the materials, but he bailed on vacation and left us hanging. The $12,100 is more in line, and they can cost even more.

2.) Don't splurge along the way. As much as the stone work did look great in the end. The costs to have it done were around $3500-4000. I doubt it did more than sell the house quicker, as it probably added little to no "value".

3.) Don't underestimate the lack of a garage/yard. This was the biggest feedback, no covered parking and no real back yard for a deck or patio.

4.) Holding a house for so long does cost... taxes, bills, insurance... All of these went 2-3x over budget, as the initial timeline was much quicker.

All in all this house has been the biggest dud, even though money was made.