Flip/House Hack in San Jose, CA

[Anant Naidu]

Investment Info:

Small multi-family (2-4 units) fix & flip investment in San Jose.

Purchase price: $650,000
Cash invested: $150,000
Sale price: $1,150,000

This was kind of a house hack. It was in really bad shape, we had to put about $50K in rehab just to move in. Then over 2 years, we rehabbed it more and put it on the market.
This was a duplex, the original plan was to live on one side and have my parents rent out the other. The market was so hot we thought we could flip it and make some good money. We put a lot of money and sweat into the place and did pretty well.

What made you interested in investing in this type of deal?

Honestly, a lot of convincing from my dad. It was in really bad shape and we just finished a flip and didn't want to do it but he convinced me of the potential and took a chance. The seller also offered to lower the price by $100K ($750K to $650K)

How did you find this deal and how did you negotiate it?

It was a block away from a previous flip. It was in bad shape and was on the market for a long time. The seller was motivated and we made a deal. ($100k off of list price)

How did you finance this deal?

Conventional loan for the purchase and personal capital (from the previous flip) for rehab costs.

How did you add value to the deal?

This was a duplex in bad shape. We completely redid both kitchens and all the bathrooms. We gutted most of the larger unit and put in new electrical, plumbing and walls. The smaller unit got new floors and paint. We replaced over half the windows. We also did some exterior work.

What was the outcome?

We had a decent place to live for over 2 years and made a good profit after the work was finished and flipped.

Lessons learned? Challenges?

We did most of the work on the place. This improves your margins but its hard work especially when you have a separate job and other responsibilities.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Eagle Home Loans in San Jose. Jim has a lot of experience and can help you even if you might not fully qualify.