All Forum Posts by: Henish Pulickal

After years of flipping homes under $850k in San Diego, I finally took the gamble on some more expensive homes.

Here's a link to before and after pics. 
https://calhomeco.com/5202-pendleton/

This home was in the worst condition of any property I have ever purchased. I spent nearly $350k fixing it up. The property was so overgrown with vegetation, we had 6 huge dumpsters filled before we could even start work on the home! As soon as it hit the market, it created quite a buzz as one of the nicest properties in the area. We picked cash buyers that had no appraisal or mortgage contingencies.  We just passed inspections, so it should be smooth sailing to closing (fingers crossed). 

I've heard from my network that commercial lenders have a deferred payments for their borrowers for 60 days already!  I haven't heard of any residential deferrals yet.  

I've done a lot of deals with seller financing, specifically pre-foreclosure homes that have equity.  In all these cases, it's always been worth my while to get the property rehabbed and sold asap!  I've never had any clause in the contract where the property gets deeded back to the seller if the mortgage payments go delinquent.  There was one time that my bookkeeper did forget to make the payments for a couple months.  The prior owner notified me of that and we made the payment asap.  Fortunately, he was cool about it and not too upset.  I also paid for him to get credit counseling.  

There's a lot of factors when making this determination.  What's your cost of capital?  Are you paying points on the money you are borrowing, or are you paying cash?  What are the transaction costs on the purchase and the sale?  Are there commissions and other fees involved?  How much would rehab cost?  Are you factoring in holding costs, utility payments?  

What do you want your profit margin to at the end of the day?  I like to set my purchase price based on at least a 10% profit after factoring in all the costs.  Some investors will do as little as 7%. If you want the spreadsheet I use to analyze my deals, I can share that with you. 

I was just in Austin last week for a bachelor party. We stayed in a vacation rental on W. Oltorf that accommodates 12 people in 4 bedrooms and paid $4,400 for 3 nights!  It was a nice house, cheap remodel, nice backyard with pool and great hardscaping. If that's any indication, perhaps there is a better vacation rental market than flipping or long-term rental.  

@Jason Heinze keep me posted if you find a great deal in LA. I would work with you on that. Close enough for me!

Not sure of TN laws, but in California, as a "professional seller" you are liable for any material defects or non-disclosure of important relationships for 10 years.  If you're not a broker, ask your broker to get out of the deal.  The listing agent must disclose that they have a financial interest in the sale of the property.  A flipper friend of mine told me he did a crappy remodel years ago and the buyer was suing him.  Ultimately, he had to buy back the home because he failed to disclose that he as the listing agent was also the seller.  That was 9.5 years later!  

Real estate is like relationships: long distance is the wrong distance. Unless it's a grand slam, home run deal, I avoid out of area real estate.  If I can't get there in an hour, it's too far for me.  

Investment Info:

Single-family residence fix & flip investment in El Cajon.

Purchase price: $380,000
Cash invested: $105,000
Sale price: $599,900

Single level 4 bed 3 bath home. This home offers a open floor plan,a nice breezy backyard. Great for a growing family. Huge 16,000 sqft lot with views, additional bonus room underneath the house about 300 sq ft.

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

These are the types of deals I do!

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

A probate/trust attorney referred this client to me. The seller wanted a simple, no hassle, cash offer since he inherited the home and lived out of state. Seller actually got an offer from another investor for $20k, but he said he didn't like/trust the other investor, so he sold the house to me!

How did you finance this deal?

Credit line and private investor money.

How did you add value to the deal?

Full cosmetic remodel.

What was the outcome?

Property sold and we got full asking price.

Lessons learned? Challenges?

The former owner converted the 2 car garage into an in-law suite with full bathroom. We struggled with converting it back to a garage or leaving it as a livable unit. In the end, we kept it as a livable unit since there was ample driveway and street parking.

Investment Info:

Single-family residence fix & flip investment in San Diego.

Purchase price: $330,000
Cash invested: $69,300
Sale price: $507,000

This home features brand new flooring, brand new kitchen and stainless steel appliances, new carpet throughout the bedrooms, new fully finished bathroom, new exterior and interior paint. The home has an additional room right off the garage with its own entrance that can be used as a third bedroom, office, entertainment room, you name it. Large front and backyard to entertain your guests.

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

This is my bread and butter: treating people well and making win-win deals.

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

One of my field reps doo-knocked this seller a couple years ago and we were able to purchase his primary residence before he was foreclosed. The seller was so happy with working with us that when he inherited his mom's house, just 5 houses down the street, he called me first and sold it directly to me.

How did you finance this deal?

Credit line and private investor money.

How did you add value to the deal?

Full cosmetic remodel.

What was the outcome?

Buyers went crazy for the home and we received multiple offers. $500k in San Diego is an affordable home!

Lessons learned? Challenges?

I inherited a whole room of Elvis memorabilia. I spent far too long trying to determine if anything had any value. In the end I gave most of it away, including a Velvet Elvis that I gave to a former high school teacher!

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

Samantha O'Brien was a true professional and made the transaction smooth from the buyer's side!