All Forum Posts by: Nikolay Izmerli

Ah - didn't move at $239k in orig condition. I guess if I were a buyer I'd be checking Zillow (public info, after all) and seeing the just-completed $207k sale, I'd figure that was what the property was "worth" and my first, knee-jerk reaction would be that the extra $32k price hike for "nothing added" is you trying to rip me off-- that might be just me though. 

The final product IS amazingly pretty -- where does the ending sale price & finishes place it on the area comps? Middle of the pack? Upper 1/4 percentile (by total or per sq ft?

ps -- I think when you do the same thing with a property in a higher price area you'll kill it, as long as the economy/fed don't do anything stupid while you are in the middle of the project. Also, if this project isn't in your wife's portfolio it should be -- she hit it right on with the style.  

Hello Nikolay, I had rentals in S. Tampa for 30 years. I am selling what I have left and looking in other areas. What I have seen in the North to South Tampa areas is that you can Buy a New Home, 3/2 with Garage for $250,000 or less. The area I am looking at for bigger lots and cheaper prices is North of Brandon Blvd. where you can get the same, almost New Home for under $200,000. So, I figured that the Builders are in the same place they were six years ago. They need to find a Tear Down Lot to Build for no more than $120,000 to build a Home and sell it for up to $250,000. My neighbor just finished building six Town Homes on W. Bay and S. Dale Mabry and sold them for up to $260,000. He started at $230,000. He offered me $330,000 for my half acre on a corner at Dale Mabry and Interbay Blvd. two years ago to build eight Town Homes to come back with a counter offer after he sold his six Town Homes. So, my question is why would anyone buy a 3/2 rehab house for over $200,000 when you can Buy a brand new one for no more than $250,000? Seven years ago my lawyer was buying the up to $120,000 houses, South of Gandy Blvd. to reahab and Flip and he would go through the Holding Period to the point where he was forced to Rent. Then, he would find another and same result until he had his new $450,000 home just South of Gandy and six rehab houses that he could not sell fast enough and had to rent. Then, he died at 58 with no previous signs of serious health problems. My example is just what I see as the competition that one would have to be a successful Flipper in Hillsborough County. When I look at a property I first find out what the Comp is for the Vacant Lot. Then, add on $100 per square foot for new construction value. Then, make the list of things that need to be fixed or replaced like a roof that is more than ten years old or you will not be able to get a Mortgage. Deduct the rehab costs from the new square footage cost and deduct another 10% for an offer, if you really think it is worth your effort. The other way used to be to find out what it would Rent for...the Rent Value is one percent of the Sale Value without the rehab. What I understood by your report, was that you are paying Retail for everything. That seems to be a very expensive way to do a Flip. The other thing is that Trump changed the amount of Deductions you can take off in your Business, in the first year. I think he made it 80% of the Costs to Rehab? I don't see what you do with the leftover 20%? Carryback/Carryforward? I don't know how that affects the Builders, but, I am told that Builders work on a 20% Profit Margin. All that work for 20%? I was looking at Robert Kiyosaki videos the other night and he said he owns 10,000 Rentals! Being a small time, burned out Landlord for 30 years, I can't imagine the work involved to maintain all those properties. And what is going to happen in the next Downturn, when half of his Tenants lose their JOB's all at the same time? All I can think is, "The Bigger they are, The Harder they Fall." Good luck with St. Petersburg.

@Nikolay Izmerli wow I'm in your same shoes, looking at properties in Ruskin and drooling over what you get for the price. Although I think if you BRRRR'd it, it'd be a home run for you! That area is growing faster than any in Tampa area, and you'd get your cash back out to keep moving! Thanks for being vulnerable, good stuff!

Well I’m a fairly decently producing agent and a 5-year flip investor and can tell you that appraisal without a buyer is worthless. No top agent will tell you to get a bank appraisal as a good determiner of listing price. What a bank is willing to lend on something and what a buyer is willing to pay for it are different things. I can’t tell you how many times I’ve seen sellers overprice outrageously because of some stupid appraisal they got and they can’t even sell it for $100,000 less than that. It can hurt, actually, because the more you overprice the longer it takes to sell and the less you get.. you are actually better off under-pricing below market and getting multiple offers because the market will set the price of its worth at that point. Comps are the best predictor of sale price, save your money on the appraisal.

@Nikolay Izmerli - love the brutal honesty/self reflection, I need some more of that in my life. David Goggins calls it an AAR (After Action Report) 

https://medium.com/@ezpromisel/the-cant-hurt-me-challenge-10-missions-from-david-goggins-to-callous-the-mind-a8d519042d54

Where you get real honest about everything that went wrong. I need to do a better job of this in my life/business, can't wait to see your next one!

So, the rehab looks gorgeous. A couple comments though:

You bought this house with slightly more than $100K in equity, those numbers were tight from the go.

Also, an appraisal without a buyer is absolutely completely worthless. So I’m not sure where you’re getting your “appraised value” that it sold so much less than, but I’ll bet any money it was in line with comps. So I’m betting you had a bad agent when you bought it (if you relied on an agent for comps) and/or you didn’t work with an agent and  being inexperienced at this you didn’t know what to look for in the way of resale inhibitors, or even look hard enough at the comps, it’s on you if you went about it without an agent or chose not to listen to them.. because ultimately it sounds like you over projected your re-sale price from the outset and as a result spent too much money on both the house and the rehab. Learn how to get better at projecting your resale value and keeping your costs in line and you will not have the same problems next time.

The original pics show a place that looks perfectly livable. A bit boring, but not bad. Was there something about the house that was awful that just doesn't show that justified the flip? 

I guess my thought is that the original sales price was based on original condition. If you were pulling out serviceable 2010 fixtures, cabinets etc that still had value you were losing that value. It affects the whole profit equation if you are doing a "restyle" rather than a "rehab". The results ARE gorgeous though, and good call on spiffying up the garage, as long as that wasn't a terribly expensive project. Simply painting garage walls in a semi-gloss white & cleaning oils stains off the floor say "this house was nicely maintained" and are among the cheapest things you can do after removing trash & mowing the lawn.

One under your belt at least gives you a more "legit" standing with lenders, contractors, etc, on the next one. Smart of you to factor in the holding costs - I don't think everyone thinks of that. 

ps - Pro photos, & staging - good call! The finished product looks amazing - the only question was it over-improved for the location.

@Nikolay Izmerli thanks for sharing man! I broke even on my first flip and lost money on the second one, so you're not alone. The rehab looks incredible and you can chalk that loss up to a hands on education in REI.

Care to share - what did go wrong? Was the end value less, rehab more, or some combination of the two? What was the biggest surprise? How did you finance? How many days from entrance to exit? What’s next for you?