We've found our next house to flip and we’re super excited about it! We found the house through a real estate agent who knew a wholesaler who was just getting ready to close on a house he was buying. Neither Lynda or I had worked with a wholesaler before, so this was a new experience.
If you’re not familiar with the term in regards to real estate, a wholesaler basically buys a house and then turns around and sells it—sometimes on the same day! They aren’t in it to make any improvements, they are in it for a quick sale. Often, these are the guys who leave flyers in your mailbox or have signs on the side of the road that say they buy houses, any condition, etc. You’ve all seen them. The nice thing about going through a wholesaler is that we are able to get a house before it went up on the MLS. The market is so hot right now, and inventories so low, that the last two houses we put a bid on got into bidding wars between MUTIPLE buyers on the first day! We immediately dropped out of them both, since our goal was to NOT get into a bidding war on a house.
Initially, this sale was supposed to be a double-close. What that means is the wholesaler was going to close on his “buy” from the homeowner at the same time he was going to close on his “sell” to us. See what I mean about a quick sale? There were a couple of catches for us though. First, it was going to happen fast—within a week. That meant we had to have our money all lined up and ready to go. And second, the owner was still in the house, so we wouldn’t be able to go in and see what we were buying in its “As Is” condition. Yikes! Buying a house sight unseen was a little scary for us.
On the positive side, we know the neighborhood and it’s exactly where we want to be. Some of the homes in this area go for up to $1M and the zip code is highly desirable. Our house is smaller than those going for the big bucks, but we knew that even if the house was in TERRIBLE condition, we’d still be okay, since we were pretty much going to gut it anyway.
We drove by the house and immediately noticed that it was going to need a new roof. It also had an overgrown, neglected front yard--the tree branches were actually resting right on the house. Curiously, there was also a dumpster in the driveway. We found out later that the daughter was cleaning out the house and getting rid of some things. (She didn't get it all though. When we took possession, there were still a number of large furniture items that we had to dispose of ourselves.)
After taking a look at the front, we drove down the alley behind the house and took a really quick peek over the fence. The backyard was a jungle of overgrown trees and weeds. If the exterior was any indication, it was going to be a project! We definitely expect to be spending quite a lot more on the exterior of this house than we did on the last one we flipped. As for the inside of the house, we just didn’t know what kind of condition it was in.
Swinging back to the positive side again, the house ticked all of our “Must-Have” boxes: Great neighborhood, decent square footage, larger lot, single story ranch. It's a 3 bedroom, 2 bath home, brick construction built in 1952--back when homes were made to last. It has 1,729 square feet which includes an addition that may or may not be permitted. However, we think we can bump that 1,729 up to almost 2,000 sf. by enclosing a laundry that is currently in the garage. Oh, and there's a 2-car garage. The original carport had already been enclosed, so we were really happy about that.
We also think once the backyard is cleaned up, we'll really like the size of the yard. It's not a deep lot, but it's pretty wide. In addition, the backyard had a couple of bonus features: a nice covered patio and an RV gate with a cement pad.
Next, we went to the Flipper Force program that we use for budgeting, tracking our expenses, and managing our projects, and we crunched the numbers. We figured in all of the worst case scenarios: new roof, new air conditioner, new electrical, and new plumbing. Just as we were doing this, the wholesaler sent us a few photos of the inside of the house. From those we could guess what we were going to need to do and we came up with as close an estimate as possible as to what the total renovation costs would to be. It wasn't going to be cheap, especially in this neighborhood where buyers are expecting a certain level of quality.
Finally, we checked comparable sales from other homes in the area. We did our best to compare apples to apples: square footage, lot size, bed/bath, features, etc. There were a number of good comps and we had our answer. This house had a great chance of making us some money.
So even with all of the unknowns, we decided we still liked the house, and jumped in. It ended up not being a double close (a few days apart), which worked out even better for us. We were able to go inside and see what we were buying before putting all of our money on the line. Luckily, we liked what we saw. Yes, it was dated, and really dirty, and smelled like cat poop which was ground into some of the carpets, and there were spider webs EVERYWHERE, but it wasn’t in bad condition at all. It turns out that an elderly woman had lived there who could no longer take care of the place--she didn't destroy it, she just didn't clean it is all.
Now that we've close we're super excited to get going on the demo, the floor plan layout, and all of the design decisions coming our way. Keep following along as we transform this house from an Ugly Duckling into someone’s Dream Home. Subscribe below to get an email notification when new posts go up.
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