I finally sold my high-end flip and made about $130,000 on it

[Mark Ferguson]

I bought a flip at the end of 2015 that had a tenant in the property. It was a very unique situation where the home had been foreclosed on, but the tenant had a ten year lease, which the courts held up! 

I was able to get the property relatively cheap because of the tenant situation. She also had a husband who was in prison for securities fraud against seniors. Bought it for $535,000 and I ended up selling it the end of February for $802,000 after spending about $30,000 on repairs. In the end after all the expenses I made about $130,000 including the commission I made as the agent when I bought it. 

The biggest challenge was getting the tenant out. She was not super friendly or willing to negotiate much. I had hoped to buy out her lease, but she wanted $100,000 at first! In the end I hired her a lawyer to help her with negotiations and we got it down to $20,000. She moved out in August of 2016.  Here are the expenses:

• Repairs: $30,000
• Interest paid: $66,000
• Loan points paid: $10,700
• Carrying costs (insurance, taxes) $9,500
• Lawyers fees: $2,500
• Payment to occupant: $22,500
• Closing costs: $28,000

Total expenses: $169,200

Here is other income I made on the property:

• Rent received: $17,600
• Commission made when buying: $16,050

Total income: $33,650

Total profit made on this deal:

• Selling price: $802,000
• Expenses: $169,200
• Income: $33,650
• Purchase price: $535,000

Total profit: $131,450

It was a good flip but stressful! I used private money to fund the deal from a local investor I know. 

[Ryan Murdock]

Interesting. I had wondered what would happen in the event a spiteful owner signed 10 year leases for $1/mo just prior to losing a property to foreclosure.  Sounds like, at least in Greeley, CO, the court is apt to side with the tenant.

Congrats on navigating out of it.