The Moldy Gold House

[Owen Dashner]

Investment Info:

Single-family residence fix & flip investment in Omaha.

Purchase price: $163,000
Cash invested: $14,000
Sale price: $205,000

This was an off-market deal brought to us by a broker. It was in Millard school district area of Omaha, NE just off of 140th and Center St., and it was the worst house in the neighborhood. The house had been vacant for awhile and needed a cleanout, mold remediation from a water leak, drywall repair and paint. It ended up being more of a wholetail because we did the mold remediation, drywall repair, some plumbing repairs, and a good cleaning and that was about it.

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

Wholetailing houses in good areas that have a major defect (mold in this case) are our favorite type of deals because they scare away most buyers that don't know how to deal with the problem. Fix the defect, do some other minor things to make the property marketable, then sell it as-is. A lot of times you can make as much profit as you would doing a retail flip, except there is a lot less hassle and a LOT less time of ownership.

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

One of our broker friends knew about the property and brought it to us knowing that we could close quickly and buy as-is.

How did you finance this deal?

We bought it using a line of credit.

How did you add value to the deal?

We cleaned out the junk and trash, fixed the plumbing leak, hired a mold remediation contractor to eliminate the mold, put back the drywall and gave it a good cleaning.

What was the outcome?

We had a bunch of showings, and ended up getting it sold after about 10 days on the market for $205,000, which left us with about $21K in profit after repairs, holding and commission costs.

Lessons learned? Challenges?

The house sat in a neighborhood that supported an ARV of $250K-ish, so we likely left some money on the table by not doing a full rehab on it. But, the driveway likely needed replaced, and there were a few other potential expensive repairs needed, plus a full paint and redoing the floors, updating the bathrooms, etc. Plus, we would likely be selling it during the winter. In the end, we thought there was too much risk in doing a full retail flip for a few thousand more in profit.

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

Stephen Ward with Exceptional Properties Group brought us the deal, 5 Points Bank has our LOC, and Angie Thiel with BHHS listed and sold the property for us.