2nd Flip Done - Web Lead - $75k Profit - 62 Days Start to Close

[Tim G.]

Purchase - $423,000 / Rehab - $62,000 / Sold Price - $605,000 / Profit - $75,000

With deals drying up in Socal, it wasn't profitable for me to be wholesaling all the deals. So I started cherry picking the good flips. I'm in escrow on flip #3 right now and here are the details on Flip #2, which netted me $75k in two months. 

Deal Source: Off market, my company website

Seller Reason: Had been divorced for several years and it was time to settle things and sell

Address: 10968 Deering St. San Diego, CA 92126

Size: 4 bed / 2 bath 1366 sq ft on a 5000 sq ft lot

Rehab Scope: Everything except a furnace and roof. $62,000 total. New windows, scraped and textured ceilings, removed a non load bearing wall, new lights, outlets, fixtures, doors, trim, bathrooms, entire kitchen, counters, backsplash, lights... the standard California flip. We followed the "Home Depot" rule. If they didn't sell it, we wen't buying it. Great time saver. 

Rehab length of time: Five weeks

Days on Market: 5 Days

Escrow Duration: 12 days (over memorial day weekend)

Funding: I borrowed $400,000 and funded the rest myself (close to $100k) The loans were structured as follows. 1st - $200,000 @10% + 2 pts / 2nd & 3rd - $102,500 @ 11% + no points. I paid the 2nd & 3rd a $750 bonus as the deal closed a month shorter than expected. 

Strategy: There was a price spike hitting this specific area and I decided to aim on the high side of the comps. Landscaping isn't a huge selling point in this part of San Diego so I focused on the fact it was a one of the few 4 bedroom homes in the area and did a really clean remodel. 

I spent extra to have a pergola installed in the patio ($2,000), mirrored closet doors in the master ($600) and ceiling fans on switches in every bedroom ($1600) to make up for the lack of A/C. I don't know if this made a huge difference but I had zero complaints from over 50 open house visitors. 

Selling: I hired an agent  @ 1% to list and 2% to buyers agent. I priced the home aggressively low at $589,000 I chose not to do a price range, rather drive interest for the first weekend and get bids. It worked, we countered multiple offers to reach a max offer of $605,000 ($14,000 over list) from the best and most qualified buyers ever. They closed in 12 days. Netting me $75,000 after all expenses. 

Where I saved money for max returns: This GC was a challenge to work with but all items were spec'd and decided prior to work starting. I had an exact bid and had to do minimal work, just QC on the project and two trips to Home Depot. Landscaping, we ran the sprinklers and bet on the rear lawn coming back to life and it did. Then I added two simple mulch borders with in the rear and front added with a couple inexpensive palm trees and the landscaping was complete for under $2,000. 

Lessons Learned: This was a really fun deal, it sold fast and the house was easy to work on. The GC was not very organized which meant a lot of redo's on poor workmanship which easily delayed me a week. But I do think this is part of the process, it was our first time working together and it showed.