Central NJ 3/2 SFR flip, 40K profit

[Jennifer Petrillo]

Foreclosure bought at on site auction for 147K.

73 day rehab (husband as project manager, also our GC and his team, HVAC guys, floor guy).

Financed with purchase and rehab loan by private (crowdsourced) money lender at 14.5% (our closing attorney was flabbergasted and repeatedly asked us if we understood how high the rate was lol!). Fortunately did not hold the loan for long as the house was listed for five days with 4 showings and two offers (and this was over 4th of July weekend!). House in a D neighborhood so we broke the comps and unfortunately had to drop the price a little when the appraisal came back lower than the offered price on the home but in retrospect there is no way we could have cut corners on any aspect of the rehab--it needed everything!

Purchase price 147K

Listed for 299K, sold for 285 (went under contract for 290 but dropped it another 5K at buyer request after the appraisal just to get out of the deal)

Home Depot credit card: 10K (appliances, fixtures and other things we picked out and purchased ourselves rather than having GC use typical builder grade stuff, also husband did some of the work himself so bought his own materials)

Brought 40K of our own cash to the closing table, loan total when paid back was 185 (original loan 175 plus 10K in accrued interest, 12 month balloon loan so we did not have to make payments during the rehab, which helped a lot with cash flow, also loan had rehab costs folded in so for the most part we paid our guys out of the loan and not our own pockets)

So (numbers are round): 285 sale price - 185 (loan payback) - 40 (cash we brought to closing) - 10 (Home Depot card) - 10 (closing costs) = 40K profit

Work done: insulation and vinyl siding (this ate 18K of rehab budget but was unavoidable as cedar shakes were disintegrating), converted to natural gas heat (ducts already in place, changed out electric hot air blower to gas one and gas company ran the gas from the street for free), replaced AC compressor, new water heater, two new bathrooms, replacement windows, new appliances but left the wood cabinets b/c they were in perfect condition and I could not justify painting/replacing them, new kitchen backsplash, removed wall between kitchen and dining room, wood laminate flooring throughout except for new carpet in downstairs den, painted the deck/railings, new garage doors, one new slider, all solid wood interior panel doors, of course fresh paint and new light fixtures throughout.

dining room

There was moisture damage downstairs from bank not winterizing and pipes bursting...thanks, bank.

Hauled out enormous old woodstove and broke up ugly old hearth and left good flue for someone to add new pellet or woodstove to if they want to, we figured not everyone wants a woodstove and this way the buyer can decide to add one back if desired

Bathroom off downstairs den, chose a walk in shower for variety, hosing off dog or muddy children, disabled access, etc. 

Upstairs bath, kept ugly vanity and top but made it look alright with new faucets, mirrors, lights

Had tub sprayed to match new toilet (it was bright yellow!)

Laundry/utility room downstairs

Bedrooms all done the same

[Jennifer Petrillo]

Total taxes paid were 4182 (owned the home from 4/18 to 8/31). One way we saved money was to NOT use a seller's agent, we listed the house with Realmart, which is an online MLS listing service. For $300 upfront plus another $150 at closing they list your house on the MLS, you write the description, fill out all the details on their website (how many bedrooms, etc), load up the photos and you're listed! They also provide signs (though we have our own for our LLC), can take photos for you, host an open house for you, etc, but we went no frills. In a strong seller's market, there really is no reason to use a seller's agent, they are just doing paperwork, put yourself on the MLS and let the buyers and their agents come to you!