House #15: First Contract

The Neighbor House is officially under contract for sale. If you recall, this was the house we were trying to sell to another investor, and we actually found a buyer via my blog post…

At this point, I have mixed feelings about selling this house (it would be an easy flip), but the buyers seem excited, so that makes me happy. The buyers are an investment team from Atlanta who own a couple rentals between them and are looking to flip their first house. They don’t have any renovation experience, but are very eager to learn. Over the past couple weeks, we have been working with them on inspections, putting together a detailed scope of work, getting contractor bids, and scheduling the rehab process.

The buyers plan to do a full rehab on this house despite the fact that a minor rehab might be a bit more profitable; I can certainly understand this, as the first house we renovated, I couldn’t have imagined leaving anything undone. Knowing the optimal amount of rehab is one of those learning experiences that takes a couple projects to really get your head around, but in this case, I don’t think a full rehab is a bad thing. We’ve also found a couple little surprises that have increased my original budget estimate — the roof has some major hail damage and needs to be replaced, and the siding needs a bit more work than I had expected.

In addition to using mostly our contractors, we plan to continue to help the buyers through the entire flip. The Pine House is right around the corner, so our project manager spends a good bit of time in this neighborhood and will help manage the project. And when the renovation is completed, my wife will be acting as the listing agent, and will be staging the house for sale.

The funny thing is, because we’ve been walking the buyers through the process in a somewhat formal way (documenting everything, getting written bids, creating spreadsheets, etc), we’ve already done more work on this house than we would have if we weren’t selling it. And we’ll probably do more work during the rehab in terms of management and mentoring as we would have if we were flipping it ourselves. And all for less profit than we would have made if we flipped it ourselves! 🙂

But, in the end, if the buyers are able to walk away with a ton of experience, a list of good contractors and some extra cash after one project, I’ll be very happy. In fact, I remember the guy who sold (wholesaled) us our very first property (The Corn House) — had no problem telling us any lies he needed to in order to get us to make the purchase. My goal is to be the exact opposite of that guy…

Btw, we’re scheduled to close on the sale on March 10…