The Puzzle House has been sold, and from a pure profit perspective, this has been our most profitable project to date (see all numbers below)…
This was a big renovation that we almost backed out of several times; ultimately, our GC and structural engineer convinced us that the structural issues (and other issues) in this house weren’t overly concerning, and nothing that repairing the foundation, jacking up the house and replacing a lot of sheetrock couldn’t fix. The nice part was that this house scared away most other buyers, so when we purchased the house, we were able to get it under contract for well below the list price and then got the bank to take an extra $10,000 off the purchase price after our inspections.
We went over budget by about 10%, but the result was nicer than we anticipated and were able to get two full-price contracts from buyers above what we had originally thought we could sell it for. In fact, our final sale price was $8000 above what our private appraiser told us it would appraise for, but ultimately BOTH of the buyer’s appraisals came in above the sale price. The big disappointment about this project was the timeframe — it took 10 weeks to rehab when it likely should have been completed in 6 weeks. Due to some failed inspections, poor scheduling and some contractor delays, we probably should have had this one sold by the time we got it on the market.
But again, the quality of the rehab was great and the profit/ROI numbers speak for themselves. This is another project that my wife gets most of the credit for, as she was the one pushing us to do this outside of our typical area. Our designer also gets a lot of credit for coming up with some fantastic design ideas for the living/dining room area that had some weird structural components.
Here is the full final analysis for this one…
Timelines
Here are the key timeline milestones:
- Purchase Offer Date: 1/12/2012
- Purchase Closing Date: 2/17/2012
- Rehab Completion Date: 5/2/2012
- Sale Listing Date: 5/3/2012
- First Sale Contract Date: 5/16/2012
- Final Sale Contract Date: 5/22/2012
- Sale Closing Date:6/22/2012
Financials
Here is the breakdown of financials for this project:
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: 36 Days
- Rehab Time: 72 Days
- Selling Days on Market: 19 Days
- Selling Close Time: 31 Days
- Total Hold Time (Close to Close): 126 Days
- Total Profit: $42,225.99
- Return on Investment (ROI): 38.39%
- Annualized ROI: 111.21%
Man! Great numbers on this one. Quick question:
“..and then got the bank to take an extra $10,000 off the purchase price after our inspections”
How did you go about getting this reduction? Threaten to back out of the deal if they didn’t cut the price based on new info found by the inspections?
Hey T,
Yup, we were still within our 7-day due diligence period and basically said, “We can only move forward if we can get a $10K reduction, based on x, y, z…” where x, y, z were all the major issues that we found during our inspections (there were many of them)…
i have done that many times. on the last one i moved it down by 3k because of the condition of the garage. asked for 5, but they gave me just 3k. i was ok with that.
btw, it looks fantastic. great job and thanks for sharing.
Funny, that you mention the rebate because I have had the same thing happen to me on the last two purchases. It seems that once you have a house under contract and ready to close they are more willing to give in just to get it off their hands rather than relisting and looking for another buyer.
BTW, that is a fantastic result in terms of quality and of course profit, setting a very high bar…
Hi Scott,
Thank you for sharing all the info. For those of you who responded to the post of having the price reduced after getting the house under contract, do you think I still stand a chance after the 5 day inspection period? The bank is going to have an Inspection done (as required by the city), and can I use what they found as a leverage for the price reduction?
Pls let me know of your thoughts. Any input is appreciated.
Hi Lil,
Generally, the seller won’t consider any price reductions after the inspection period is over. Technically, you can’t back out at that point and are required to go through with the sale, so there is little motivation on the part of the seller to give in to any price drops or requested repairs.
That said, it can’t hurt to try. But, in the future, try to get all your inspections done in the allotted time and ask for any repairs or price decreases before the inspection period is over.