We closed on the sale of The Rent-Back House today…
Nothing more to add about the project that I haven’t already mentioned, so let’s jump into the stats and financial details:
Timelines
Here are the key timeline milestones:
- Purchase Offer Date: 7/23/2012
- Purchase Closing Date: 11/15/2012
- Rehab Completion Date: 2/12/13
- Sale Listing Date: 2/12/2013
- First Sale Contract Date: 2/13/2013
- Final Sale Contract Date: 2/13/2013
- Sale Closing Date:3/15/2013
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: 115 Days
- Rehab Time: 20 Days
- Selling Days on Market: 1 Day
- Selling Close Time: 30 Days
- Total Hold Time (Close to Close): 120 Days
- Total Profit: $36,436.11
- Return on Investment (ROI): 50.61%
- Annualized ROI: 153.95%
That is a great profit on such a light rehab, good job!
Did you pick this house up from the MLS or was this a result of your mailings?
I am drilling more and more into short sales because I am finding it extremely hard to find something worth a damn off the MLS considering that all these big shot investors are overpaying in cash for properties out there. I have to imagine that it must be the same in your part of town, right?
Are you guys planning on focusing more on short sales and/or pre-foreclosures?
I figure the foreclosure/REO inventory is going to dry up very soon. I read in the paper yesterday that foreclosure notices are down 69% from this point last year, therefore I figure that a year from now the REO inventory will be close to nothing…
Hey Luis,
We’ve pretty much given up on the MLS. I haven’t looked at MLS listings in about 3 months now.
This property came from our short sale mailings, which is where most of our leads are coming from these days. I know what you mean about investors overpaying — I haven’t posted it yet, but we just wholesaled Houses #44 and #47 to out-of-state investors for a total profit of over $45K, which is more than we would have made if we had rehabbed them!
Moving forward, looks like we’ll just be marketing for short sales and wholesaling…at least until the market changes again… 🙂
Hi J-
Congratulations on a successful flip. I agree with you guys on the REO market drying up and the increase of cash buyers overbidding on properties. Seems that good deals are going to be harder to find.
Can I ask – when do you decide to wholesale for profit instead of flipping them for yourself? Is there a criteria you use to determine what strategy you want to take?
Hi Rick,
There are no formal techniques we use, but we’ll generally do various analyses for different levels of rehab to see where our profits would be in each situation. Then we’ll pick the situation that seems to have the best return for the amount of work (and risk) involved. We’ll also consider how busy we are with other projects, whether we need the cash for something else, and whether we have contractors available to do the work as quickly as we’d like them to.
There are definitely some times when my wife and I disagree on whether we should wholesale or rehab, but after a little discussion, the optimal strategy often becomes clear.
J,
Again, I can not tell you how much I enjoy your website!
I noticed a couple of things on this home. I did not see any line for insurance (do you not insure them if you now own them), no closing cost at all, no mortgage cost (I am guessing you are paying cash for these). And the commision on the sale (the $3360), is this based on you or your wife being the selling agent?
It looks like you have really minimized your fixed costs!
Ron.
Hi J Scott,
Great blog! It’s nice to know we aren’t the only ones having a hard time finding deals. Do you ever use a buy and hold strategy or do you flip or wholesale all your deals?
Hey Mark,
It’s definitely tough to find deals these days. We rehab about 90% of our projects and wholesale the other 10%. We’ve been doing more wholesaling recently, as there are a lot of investors willing to pay near-retail prices…
Hey Ron,
To address each of the line items you mentioned:
– Insurance: We typically self-insure, unless we have a lender, in which case we’ll get builder’s insurance. We’ll also get insurance when we have a higher-priced house or when there is a particular concern. But, for about 75% of our houses, we self-insure.
– Closing Costs: In Georgia, it’s standard for the buyer to pay all closing costs, so that’s why you don’t see any closing costs on the sale side. Our purchase price on this one was $49,000, so you’ll notice about $700 in closing costs on the purchase side. That covers attorney fees, title search title insurance, etc.
– Mortgage: We paid cash for this one, so there were no mortgage/loan costs associated with the transaction.
– Commission: Yes, my wife and I are both licensed. We factor in 6% of the sale price as commission for our sales — 50% goes to the buyer’s agent and 50% comes back to us. It’s really no different than if we just paid out 3% to the buyer’s agent and kept the rest, but I do it that way for accounting reasons.
For this one, our fixed costs were VERY low…