Flipper's dream scene in Pittsburgh

[Debashish Majumder]

Investment Info:

Single-family residence fix & flip investment in Mount Oliver.

Purchase price: $19,152
Cash invested: $73,000

My 3rd flip attempt - bought a property on auction.com that resulted in an immediate large equity position pre-rehab. Beautiful house near downtown Pittsburgh in the Mt. Oliver neighborhood that needed some cosmetic work for a quick flip.

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

This deal was a little magical - I was outbid in this auction (see section below) and only managed to procure this property by chance.

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

My realtor (wife) found it on auction.com - we made a bid at the opening price.
Of course we were outbid immediately but the person who won the auction couldn't follow thru with the financing.
The bank then reached out to me asking if I wanted to buy the house at the price I quoted (which was ridiculous - the house was worth at least 3x as-is. Of course I said yes and we proceeded to move towards closing. I mean I was already in for $2500 - so I was also in for $20,000.

How did you finance this deal?

Fronted the cash for the purchase upfront from the profits of my 1st fix-n-flip closing.
Had to drag my feet a little on the closing date so things were up in the air for a little bit while my 1st flip sale was in contingent state.

How did you add value to the deal?

My realtor (wife) told me the house can only sell for $115K but I felt the potential was of the property was much more. So I did all the cosmetic changes with nice high-end finishes, with a brand new roof, landscaping, paved walkways and stairs etc to bring the house to where it will command the target market-price. Now, I attempted to increase value by adding a whole new finished basement w/o blowing up the budget - the house appraised for $150K due to the full bath and basement added.

What was the outcome?

Found a buyer within the first week of putting the house on the market (helps when you're listing the most beautiful house in the neighborhood!). Buyers loved it, got the house inspected and appraised - it appraised for my target value ($150K).
Unfortunately, buyer was trying to bite off more than they can chew with a inter-state move and got cold feet and no-showed on closing date. We sued, won and were compensated fairly. So we rented the property for top dollar and will list this summer again

Lessons learned? Challenges?

You can have the best-laid plans - all it takes is one person working in bad-faith to undo it.
Always plan and be ready to execute your contingency exit strategy.

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

Realtor - Carrie Majumder (my wife)
Lender (rehab) - Lima One Capital
Rental & Listing - Keller Williams Realty
Lender (refinance) - FlipSimpli (Beach Park Partners)

[Debashish Majumder]

Hey Brett, I did some of the work myself - basic stuff like drywalling, painting, landscaping etc. but I did have my assembled crew working with me as well. It helps to assimilate a group of professionals who are steady, long-term professionals and who have personalities you like. So I have 2 groups of general contractors (each has around 3-4 daily workers), 2 roofing companies (both very reasonably priced and will ALWAYS return my call), an electrician, an HVAC tech, a painter, and a landscaper/masonry guy who I consistently work with. The only real variable is the plumber (mostly because I only want to use the best companies and they're very much in demand so they're almost never available consistently) but now I think I've finally picked one I'd consistently like to work with - my wife became friends with the owner's wife. :-)

So long answer but yeah, it always takes an army and I've taken the advice of those who came before me and have assembled (finally!) a good team and we now specialize in the 60-day flip. Yes, auction.com places a $2500 hold on your card just to let you bid on properties. (you get it back if you don't win any auctions). Hope that answers your questions!