We closed on The Horsey House today… (see all the financial results below)
I was confident from the beginning that this would be a very profitable deal, though I had it in the back of my mind that the deal seemed a bit too good to be true, and was always waiting for something to go wrong. Ultimately, nothing major went wrong, and the whole project ended up going flawlessly. The only real surprise was that the property was on septic instead of public sewer, and the septic system needed about $650 worth of maintenance.
Other than that, the rehab went smoothly and quickly, we stayed on budget, and the house went under contract in a short period of time. The most frustrating part of the whole project was waiting for the deal to close — the buyer’s loan spent an extra month in underwriting, taking our total hold time from an estimated 55 days to a total of 86 days.
Here is the final analysis for this one…
Timelines
We had this one rehabbed and under contract in less than a month, but again, the closing took quite a while (2 months) which dragged out the entire project.
Here are the key timeline milestones:
- Purchase Offer Date: 2/16/2011
- Purchase Closing Date: 3/14/2011
- Rehab Completion Date: 3/24/2011
- Sale Listing Date: 3/25/2011
- First Sale Contract Date: 4/10/2011
- Final Sale Contract Date: 3/10/2011
- Sale Closing Date: 6/8/2011
Financials
Here is the breakdown of financials for this project:
Our profit on this one was over $35K, and given how quickly and easily the project went, I’d consider this one of our most successful deals to date. Additionally, because we got a $60K loan on the project from a private investor — and because our total out-of-pocket expenses were not much more than the $60K we borrowed — our ROI on the small amount of cash we invested was tremendously high. Specifically, our ROI was nearly 800%, and our annualized ROI was nearly 3400%. I’ll take that any day…
Btw, this is also the reason you see the $17K returned to us at purchase closing — the loan was for more than the purchase price, so we walked away from closing with $17K and used that cash for the rehab.
Final Statistics
Here are just some of the final statistics that I’ve been tracking for all my projects, and that summarize the success/failure of each project pretty well:
- From Offer to Purchase Time: 26 Days
- Rehab Time: 8 Days
- Selling Days on Market: 16 Days
- Selling Close Time: 59 Days
- Total Hold Time (Close to Close): 86 Days
- Total Profit: $35,735.61
- Return on Investment (ROI): 797.83%
- Annualized ROI: 3386.12%
Congratulations on yet another successful project! Looks like you had an awesome private lender help you with this project. Care to share how you were able to get private money?
Wow… awesome work J Scott.
You really got this one at a good price given the age and condition of the house.
Congrats on yet another closed transaction. I’m sure you enjoy closings like this one? Tell your wife she does an amazing job on the staging-it looks fantastic! Just curious if you are doing any marketing for finding properties or are you able to find enough discounted REO’s or MLS listings in your area?
Fantastic. It’s nice to see the short days on market to sell. You are definitely doing, not just something, but everything right. Good job.
You should celebrate in Vegas!
May seem silly .. but how did you keep the utilities to $200 for March thru to june when you sold?
Hi Lynn,
The gas and water bills were almost nothing, so the bulk of the costs were for electric. That said, I haven’t gotten my final utility bills yet, so I imagine there will be another $100-150 for utility costs before all is said and done.
wow!! I have my helpers keep the place at 55 degrees in the cold so the pipes won’t freeze and averages $100-200 a month. Tried not turning on water/ electric on my first rehab and waited till was rented and ran into problems… always learning. Maybe a bit colder in Knoxville this winter…
Hey Lynn, I’m into photography and that is a very clever series of photos on your homepage.
Hey Ryan –
Yeah, it’s getting tougher and tougher to find deals these days, though this industry is cyclical and things could change quickly.
Hey Sean –
My lender is another investor who I’ve built a good relationship with over the past year or so. She knows the business as well as I do, so she understands my investments and sees all the data on each project before she lends. While she probably takes some extra risk by lending high LTV, if a deal would ever go south, I’d repay the loan personally in a heartbeat, so her risk is essentially zero.
Appreciate the response J Scott. Goes to show the importance of not only networking,but developing good relationships as a result of networking. Congratulations again!
Congrats on the sale. And a big thanks for the work that you do and share on your blog. The Final Analysis you put together for each of the properties you invest in and sell is very informative and helpful for beginners and seasoned investors alike. Transparency is key when doing business to get a nice clear picture of the costs involved and actual final revenue generated. The timelines, financials and final statistics that you lay out in your blogs are great. Keep up the great work! You fellow investors like myself appreciate what you do.
“I also think â€it’s getting tougher and tougher to find deals these days, though this industry is cyclical and things could change quickly. to agree with J.Scottâ€. Guess I got beat to the punch!
Very nice.. its very encouraging to see you do this.. For a newbie like me in this business i would like to learn more from you is there any tips you can tell me?
By the way Invested same as you on real estate currently in Queensland Investment Properties and got nice profit but is there any secrets ti gain more.. I like the statistics you shown very fair profit indeed.
Hey Aces, you mentioned it’s getting harder to find deals. What is your plan? Is it time to start being more aggressive in buy and hold properties? When the good deals for flips are gone (or at least a lot more competitive to where your time will be more dedicated to wheeling and dealing), I’m betting a lot of the good deals for multifamily rental properties will be gone as well.
Hey Jon –
We’re definitely starting to consider other strategies in addition to the our core plan of buying and rehabbing REOs. For example, we’ve started looking at a lot more short sales (and making a lot of offers), we’ve started looking at more wholesale opportunities (House #24 is a good example), we’re doing some more consulting and rehabs for other investors, we’re looking at some larger multi-unit properties, etc. I have a feeling things are going to continue to change rapidly in this market, so changing strategy will be required at some point, unfortunately…
So…when you jump into all these “other” ventures, will you let us know on here or BP? or will you keep all that on the “down low” and just keep this a strictly flipping site?
Hi Shane –
Over the past 6 months, we’ve started working a lot with other investors — specifically, we’ve helped purchase, rehab, stage and resell a few dozen properties. I’m not going to talk too much about this work, as the properties aren’t ours, and at least a couple of the investors we work with prefer not to have their deals discussed in any detail that might give away who they are or where their properties are. But, at some point, I do an overview of the work we’re doing and whether we plan to keep on doing it. To be honest, the work involved may not be worth the extra income, as some projects can be pretty time consuming and can detract from us doing our own deals.
What is the commission on purchase and commission on sales? You pay a commission when you bought the property?
Is this not the same as the agent commission that you paid when selling the house?
Thanks
Flo,
The commission is what is paid to the agent/broker at sale, and is customarily paid by the seller, not the buyer.