Just finished a rehab, Not an REO, Not a SS, In Los Angeles

[Brian Wall]

Hey BP Nation!

It has been too long since I posted about one of my deals, but I just finished rehabbing the property (it is listed for sale now) and it was NOT an REO and NOT a short sale. I found by direct marketing!

So, here we go:
In July I sent out 1500 yellow postcards. I sent them to Non Owner Occupied properties with 50% or less LTV, 3 bedroom, SFRs. I got the mailing list from my title company, at no charge, and it cost me $600 for postage and processing via Click2Mail.com. The postcards basically said I want to make an all cash offer on your home, with no RE Agent commissions (although I am an agent).

I received 12 phone calls, and 2 of those were serious motivated sellers, the other were just curious. One of those was a guy who's mother had just passed away about a month earlier. He mostly lived in Utah, but was staying out here while his mother was ill. She knew she was passing so she deeded the house over to him before she passed, he was only child, and his father was not in the picture.

He said he wanted to move (he wanted the cash) by the end of August, I told him that would be no problem. I asked him how much he wanted to sell for. He acknowledged that the house needed to be upgraded (it had all original kitchen, bath & windows from the 50's), so he was looking for $215k to $230k. I knew, before I met with him, that the ARV for this property was easily $300k, maybe $310k, and I knew the rehab would be $25k, assuming no major system problems (plumbing or electrical). We had just rehabbed a very similar house, almost exactly same layout, for $25k.

I responded to him that I thought $200k was a fair price, explaining that if he sold with a real estate agent, he would net less than $200k. He accepted the $200k price.

Great, now I got a deal, but I don't have the cash. So, I scrambled a bit, and eventually found (with about 1 week to spare) an investor that had done one or two deals with someone else, so he was familiar with the flip process, but hesitant to go on his own. After some back and forth discussion, we agreed that he would put up the cash to purchase the house, and I would put up the rehab money and we would split profits 50/50 (after I get listing commission, of course). Before we closed, I had my contractor go through the house and he was concerned that the windows we were going to replace were going to cost a little more than expected, so I went back to the owner, and he agreed to credit back $5k. So, net purchase price was $195k.

We closed escrow on the purchase on 9/1 and now, the property is listed, (on 11/11/11 how lucky is that!). The rehab should have finished a few weeks back, but I had some financial issues so we did not get the kitchen and carpet installed until just last week.

The rehab cost about $27k, so pretty close to budget.

We are expecting this property to sell quick. It is well priced, and the nicest house on the market in the area.

I took a before video, and an after video. here you go.

Before: http://www.youtube.com/watch?v=duoMd-FtgnU

After: http://www.youtube.com/watch?v=DTUuWi9dG5M

I welcome any feedback, good or bad! In case you are wondering, yes, I did ask the owner about owner financing, he was not opposed to the idea, but he did need the cash, as he was buying a property in Utah, and needed the cash to buy that property.