Fix & Flip in Compton, CA

[Cesar Guevara]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $285,000
Cash invested: $15,000
Sale price: $471,000

Got the off-market lead through agent in August of 2019. Our first initial plan was to go in there and add an ADU but decided to pull the trigger in the beginning of the 2020 and put it on the market as a SFR. We originally listed it at $469,999 with expectations of getting $480,000 for the house but the property did not receive any offers in the first weeks. We went ahead and reduced the price to $459,999 which drove traffic in and in not time accepted an offer at $471,000.

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

The market is Compton is one of my target areas and I know properties in those price points are desirable to buyers under a certain budget.

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

I had a stager stage one of my first properties and during the set up I met her husband who is a realtor. Built a relationship with him let him know what I was looking for (what areas and price point). About a month later, he reached out to me and presented the deal. Negotiated he would get the deal back once it was ready to hit the market and did my due diligence finding out that there was an unpermitted area which reduce the price point by 20k.

How did you finance this deal?

Hard money lender and a private money lender who actually wanted to be joint venture on the deal.

How did you add value to the deal?

Brought the house back to code and compliance together with adding a bed and half bath to maximize the potential.

What was the outcome?

The ARV was 480k and it was missed by 9k but overall such a great experience and will be using the learning experience on future deals.

Lessons learned? Challenges?

Lessons learned from this project is to do homework with the city to be better prepared for their obstacles and to list the price low to ensure you drive traffic to whatever designated area you are in.