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Updated over 4 years ago, 04/22/2020
5 Dreamview Drive Fix & Flip
Investment Info:
Single-family residence fix & flip investment in Charleston.
Purchase price: $86,500
Cash invested: $232,500
Sale price: $375,000
House was extremely dated and had structural framing issues which we negotiated the price down substantially. This was by far the biggest and most stressful project we've ever taken on. It took over a year and $220,000 to renovate this 4500 square foot ugly duckling into a brand new home. Our ARV held true for the entirety of this project and sold at the exact price point we predicted, the only issue was the renovation taking far longer than expected and that hurt our profit margin.
What made you interested in investing in this type of deal?
This home was built by a famous local architect. Unfortunately, it was wasting away as his family was going through health issues and they let it go to foreclosure. We bought the property at a deep discount due to its condition.
How did you find this deal and how did you negotiate it?
This was an MLS foreclosure that our realtor brought to us. We ran our numbers to the property and although it was listed at $200,000 we stuck firm to our offer and got our offer accepted well below 50% of the asking price due to the condition and structural issues that were identified.
How did you finance this deal?
A blend of hard money to cover the construction costs and private money for the purchase loaned by my father who used a HELOC on his personal residence. We paid monthly interest to the hard money lender, but were able to pay my father's interest in a balloon at the end of the project.
How did you add value to the deal?
This was a complete renovation from the roof down. All new new drywall and paint in a 4000 sq ft home, flooring, replaced all plumbing and upgraded electrical, new siding and garage doors, 4.5 updated bathrooms, kitchen remodel with quartz countertops and stainless appliances, many windows replaced, we kept as much original trim and doors as possible, upgraded the staircase with fashionable stainless steel cable system. The updates were endless, there wasn't a surface we didn't touch.
What was the outcome?
Final outcome was an off market sale to buyers that had been following our Facebook page and the buildout of this home for over a year. They were able to pick some of the final finishes like counter tops and back splash, the cable railing system along the stairs, and a few light fixtures. The ARV stayed true for the entirety of this project even though it took over a year. We didn't get to snap a photo with the buyers at closing like we normal due to COVID-19, hopefully we see them in the future
Lessons learned? Challenges?
Huge lessons learned about checking for framing and structural issues that aren't noticeable at first glance. Upon taking down drywall we found a lot of water damage and many framing issues that are against current code standards - headers and floor joists had to be replaced, the back of the house had to be jacked up 2 inches across a 40 yard span. The sheer size of this project was a challenge in itself
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Family First Realty in Charleston, WV helped us purchase the house at a huge discount
Real Estate Central in Charleston, WV helped us sell the home. The DiFlippo team - Christina, Lia, and David
That's an incredible discount on the asking price! What was your method of presenting your offer? Did you give the seller quotes on how much you were going to have to pay to fix the problems or what was the way you went about it??
Congrats!
Yes it was! We always included a detailed construction budget with pictures of the worst moldy, crusty spots we can find when submitting offers. We were dealing with a bank on this one, and usually they don't care about any of that stuff let alone consider it. I honestly didn't think the offer would be accepted that far off the asking price. It was quite shocking. We actually offered $82,000 and they came back at $90,000. Split the difference and settled on $86,500. Looking back we should have been at $60,000! It's all part of the journey.
Originally posted by @Stetson Hamilton:
That's an incredible discount on the asking price! What was your method of presenting your offer? Did you give the seller quotes on how much you were going to have to pay to fix the problems or what was the way you went about it??
Congrats!
Originally posted by @Jordan Crist:
Yes it was! We always included a detailed construction budget with pictures of the worst moldy, crusty spots we can find when submitting offers. We were dealing with a bank on this one, and usually they don't care about any of that stuff let alone consider it. I honestly didn't think the offer would be accepted that far off the asking price. It was quite shocking. We actually offered $82,000 and they came back at $90,000. Split the difference and settled on $86,500. Looking back we should have been at $60,000! It's all part of the journey.
Originally posted by @Stetson Hamilton:
That's an incredible discount on the asking price! What was your method of presenting your offer? Did you give the seller quotes on how much you were going to have to pay to fix the problems or what was the way you went about it??
Congrats!
Awesome! Definitely a great way to submit an offer!
