Fix and flip turns into seller financing.

[Eric Kirkham]

Investment Info:

Single-family residence fix & flip investment in Taylorsville.

Purchase price: $350,000
Cash invested: $65,000
Sale price: $470,000

Purchased this property off market. The home needed a decent amount of work as it had fallen into disrepair for about 10 years. All the major components were updated and I added plumbing for a basement mother in-law apartment. The total rehab cost $65k and the home sold for $470K on a seller financing note at 5.5% over 30 years.

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

The ability to add value in a very hot market. Homes with a mother in-law basement apartment were fetching a serious premium in this area. The ability to add so much value in a short time was exciting and this was the ugliest home on the street so it felt great to bring the home back up in line with the surrounding homes.

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

I found this deal through a friend. The Seller wanted to move out of state ASAP and did not want to make any repairs or remove all the cats and dogs from the home for showing. I showed the Seller comparable homes in the area and asked him what he wanted to get out of the home after agent commissions were paid. He gave me a price and I told him I would buy the home tomorrow for cash. He was thrilled to not fix the home or disrupt his pets for showings.

How did you finance this deal?

Cash purchase.

How did you add value to the deal?

New items: Roof, Funrace, AC unit, Paint, Floors, Carpet. Added plumbing and electrical connections for a basement apartment. Upgraded the lights in the home from wall outlets to overhead lighting. Repaired the sprinkler system and revived the dying mature trees on the property.

What was the outcome?

Added a significant amount of value to the home and neighborhood. I Seller financed the deal to a Buyer that is now house hacking the basement.

Lessons learned? Challenges?

Don't always take the highest dollar amount offer on a home. The first Buyer on this home had many many issues and I finally cancelled the contract. The second Buyer had a slightly lower offer but he closed the deal no problem.

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

I was the agent on the purchase and sale of the property.