I bought a flip at the end of 2015 that had a tenant in the property. It was a very unique situation where the home had been foreclosed on, but the tenant had a ten year lease, which the courts held up!
I was able to get the property relatively cheap because of the tenant situation. She also had a husband who was in prison for securities fraud against seniors. Bought it for $535,000 and I ended up selling it the end of February for $802,000 after spending about $30,000 on repairs. In the end after all the expenses I made about $130,000 including the commission I made as the agent when I bought it.
The biggest challenge was getting the tenant out. She was not super friendly or willing to negotiate much. I had hoped to buy out her lease, but she wanted $100,000 at first! In the end I hired her a lawyer to help her with negotiations and we got it down to $20,000. She moved out in August of 2016. Here are the expenses:
- Repairs: $30,000
- Interest paid: $66,000
- Loan points paid: $10,700
- Carrying costs (insurance, taxes) $9,500
- Lawyers fees: $2,500
- Payment to occupant: $22,500
- Closing costs: $28,000
Total expenses: $169,200
Here is other income I made on the property:
- Rent received: $17,600
- Commission made when buying: $16,050
Total income: $33,650
Total profit made on this deal:
- Selling price: $802,000
- Expenses: $169,200
- Income: $33,650
- Purchase price: $535,000
Total profit: $131,450
It was a good flip but stressful! I used private money to fund the deal from a local investor I know.
