Here’s a quick recap of our accomplishments:

• 24 Houses Purchased & Resold (Every One Profitable!)
• 5 Mobile Homes Purchased and Resold (4 out of 5 Profitable)
• 2 Houses Held as Rentals for Short Periods

Of the 24 houses that we purchased and resold, the level work completed breaks down as follows:

• 18 Full Rehabs
• 2 Minor Rehabs
• 4 Wholesales to Other Investors

In addition to the 29 deals that we did directly, we’ve also started carving out a niche helping a couple other investors with their rehab and resales. My wife has staged nearly a dozen other properties for other investors (including a model apartment for an apartment complex), we have managed several rehabs and we have listed and sold several properties for a couple very select investors.

Some financial statistics of the 24 houses purchased and resold:

• Total Profit on Flips: $478,083.10
• Average Profit Per Flip: $19,920.13
• Minimum Profit: $3,416.21 (House #1)
• Maximum Profit: $40,487.06 (House #16)
• Average ROI: $94.37%
• Average Annualized ROI: 421.80%

Also worth noting is that by having our own real estate licenses, we have saved or earned over $82,400 in commissions over the past 3 years. That about one-sixth of our total profit.

Of course, those numbers don’t take into account the cost of employees (myself, my wife and our project manager) nor the overhead costs of the business. Between the costs of being real estate agents (my wife and I), the cost of equipment, vehicle maintenance, staging furniture, etc, we actually spend a good bit of the profits, though I don’t have the exact percentages. So, don’t assume the numbers above are what we’re taking home — it’s a pretty good business, but not that good!

In terms of our rehabs, here are some interesting statistics:

• Average Purchase Price: $47,541
• Average Rehab Costs: $24,242
• Average Rehab Project Time: 28.5 Days
• Average Sale Price: $101,108
• Average Hold Time: 103.4 Days (not including the two rentals)

One of the places where we’ve been tremendously successful is in marketing and selling our properties in this tough market. While many investors have properties sitting for months on end and/or selling for far below what they expected, so far we’ve been very good at getting properties sold quickly and near our expected sales price:

• Average Time From List to First Contract: 17.9 Days
• Average Time From List to Final Contract: 43.0 Days
• Longest Time Property Took To Sell: 184 Days
• Shortest Time Property Took To Sell: 0 Days (Twice)
• Average Sale as % of List Price: 95.2%

Probably my favorite stat above is the 95.2% of sale price to list price. This means that on average, we sold our houses for over 95% of what we *ORIGINALLY* listed the houses for. Even in rare cases where we had to drop our prices, the average was still tremendously high.

Lastly, it’s nice to know that we’ve had a small little impact on our local economy. In addition to rehabbing 24 properties, which inherently improved the neighborhoods where we buy, we spent a good bit of money doing so:

• Gross House Purchase Costs: $1,141,000
• Gross Sales Revenue: $2,426,600
• Total Spent on Contractors: $465,000
• Total Spent at Home Depot: $117,000

It’s amazing that in three years, we’ve bought and sold over $3.5M in real estate and have spent nearly $600,000 on renovation costs.

Top 10 Lessons Learned on House #1

If you have any of your own lessons to add (or have any questions about ours), leave me a comment. I have a feeling a lot of our readers will find this article to be very helpful…

For those following this blog since the beginning, you may recall that this was the very first house we purchased, more than two-and-a-half years ago. Back when we were originally considering this property as our first investment, my wife and I said to each other, “The goal is just to break even on this one!” And that’s pretty much exactly what we did.

While the other two dozen or so houses we’ve bought and sold in that time have been very profitable (all but one have hit our minimum $15K profit target for flips and $5K profit target for wholesale deals), this one just barely eeked out a small profit (and it easily could have gone the other way!). We made a lot of mistakes on this property — I have an upcoming post that will touch on many of them — and while it was a tremendous learning experience and a stepping stone to the success we’ve had, it’s also been an endless source of frustration and annoyance over the past two years.

So, I guess what I’m saying is, I’m glad to be rid of this house, and other then the lessons I’ve taken from it, I hope I don’t have to think about it again for a long, long time…

On that note, let’s jump into the final analysis, and remember that because we rented this one for two years, some of the numbers are skewed…

Timelines

Because we rented it for two years, this was by-far the longest we’ve ever held a property; in fact, even if we hadn’t rented it, the holding time likely would have been quite long. Because we listed this one on two separate occasions (back in 2008 and then again last month), I’ve included two dates for a couple of the milestones below.

Here are the key timeline milestones:

• Purchase Offer Date: 7/24/2008
• Purchase Closing Date: 8/13/2008
• Rehab Completion Date: 10/17/2008
• Sale Listing Date: 10/18/2008 & 3/9/2011
• First Sale Contract Date: 2/9/2009 & 3/19/2011
• Final Sale Contract Date: 3/19/2011
• Sale Closing Date: 4/28/2011

Financials

Here is the breakdown of financials for this project:

We will clear about $3400 on this project (after including unpaid utility bills we’re waiting to receive and insurance refunds). Given that we earned over $30K in rent payments and lease-purchase fees, you can see how easy it would have been for us to actually lose money on this one. Of course, we did do two rehabs as opposed to one, so that added a good bit of expense.

It’s hard to determine our exact ROI on this one, as we refinanced about 8 months ago, so the amount of investment I’ve had in the deal has changed at different points in time; at some point I’ll do a Internal Rate of Return (IRR) calculation, but I’m quite sure my ROI will be very low, regardless of how I look at it. For this analysis, I’m going to estimate that my total ROI was about 8% and my annualized ROI was about 3%.

If my wife wasn’t licensed and if we had to pay a 3% commission to another agent to sell it for us, we actually would have lost a little bit of money on this project. Luckily though, we can say our streak of profitable deals is still alive at 20 in a row…

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: 20 Days
• Rehab Time: 65 and 8 Days
• Selling Days on Market: 10 Days (this was for the second listing)
• Selling Close Time: 40 Days
• Total Hold Time (Close to Close): 988 Days
• Total Profit: $3356.08
• Return on Investment (ROI): 8.20%
• Annualized ROI: 3.03%

House #1: The Corn House

The Corn House is scheduled to close towards the end of this week. Appraisals and inspections are complete, approvals are in, the loan is cleared to close, and unless the buyer decides to back out or the house burns down, I think we’re going to get this one closed. Considering we’ve had it for two and a half years now, I’m ready…

Stay tuned for a couple posts that will discuss the final outcome from a financial perspective and also lessons learned on this house, our very first, and our very biggest headache…

House #18: The Haggle House

As I mentioned the other day, our tenant is leaving on May 15. We had our attorney write up the lease amendment to ensure that there was no issues with how the early termination was structured, and also to ensure that the tenant didn’t get any ideas about suing us for the illness she claims was caused by the (brand new) carpet in the house. As I suspected, she signed the amendment immediately, which reinforces my belief that she just wanted to get out of the lease, and the illness claim was just a lie. But, I guess I’ll never know for certain.

We plan to put the house back on the market once she moves out, so once I get an idea of how much work we need to do to make it sellable, I’ll post more…

House #21: The Leak House

It’s been over four months now that we’ve been waiting to purchase this property, and we FINALLY have a closing scheduled! Looks like we should be able to get this one closed by the end of the week, and our contractors are scheduled to start rehab next week. We expect about 8-10 days of rehab, and I hope to get it back on the market about 2-3 weeks from now.

I’ll have more to say on this one once we officially own it…

House #23: The Horsey House

Things are moving along nicely on the sale of The Horsey House. We’re through the due diligence period, and the buyer didn’t request any additional work or repairs. I was present at the inspection and there were a few things that were pointed out by the inspector that we’re planning to fix anyway, as it’s the right thing to do (I don’t like my houses to have ANY safety issues, even little things like miswired outlets).

We had the first appraisal today, and I honestly have no idea what price it will come in at. Comps are very sparse for this sale, and I’m just hoping the appraiser uses the high-priced bad comps and not the low-priced bad comps — or perhaps he can find some good comps that I wasn’t able to find. Assuming we can get both appraisals done in the next week or so, we should be good to close this one by mid-May.

I’ll have more to say when the appraisal comes back…

I was seriously concerned about this particular appraisal, as there aren’t a lot of comps in the area, and this is the same appraised value that we received about a year ago, when the market was stronger. The last hurdle for this deal will be underwriting, which we don’t expect to be a problem. The buyer is using a downpayment assistance program that does a lot of upfront underwriting tasks — so they’ve already done much of the underwriting around the buyer. Plus, the buyer works for this particular program, so I have a feeling those in charge aren’t going to let her down…

Anyway, this has been one of the easier transactions we’ve done recently, probably because we’ve owned the house for nearly three years, and so we haven’t had to jump through a lot of hoops with second appraisals, documenting rehab costs, etc. The last issue is that we agreed to install a fence for the buyer; we have that scheduled for next week, and my guess is that — assuming no last-minute issues — we’ll probably close next week as well.

The profit on this one will be next to nothing (remember, this was our first house, and we made A LOT of mistakes), but it doesn’t look like we’ll lose money, and the experience we’ve gotten from this two-and-a-half year project has been invaluable to our business and our success.

I’ll have more to say once this one is sold…

Because the buyer is using a public loan program for financing, any inspection issues that were identified during the inspection had to be reinspected once repairs were completed. The original inspector found about 13 minor issues, all of which were taken care of by our rehab crew last week. The inspector returned yesterday and signed off on all the repairs, so that hurdle is now out of the way.

Additionally, the appraiser came out to the property yesterday and did the appraisal. Unfortunately, there are very few comps in this area for this house, so I’m not convinced it will be easy to get the appraised value to the contract price. That said, if we can’t get it to the contract price, I’m at least hoping to get close — if it comes in low, we’ll likely just drop the sale price and the buyer will get a bargain. We should know by the end of the week.

Once the appraisal is completed, the loan goes to underwriting, and we should be within a week or two of close.

The last item for this house will be getting a fence put in for the buyer. We agreed to fence the backyard, which is actually pretty big (about 260 linear feet for the fence). We’ve gotten our bids and are now just waiting to get closer to closing before we do the work.

Ultimately, there are about 13 repairs we will have to complete in order for the buyer to get approval for her loan — everything from repairing some damaged siding to adding some deck flashing to reversing the hot/cold lines in the shower to installing a chimney cap. I expect the repairs to take about 2 days at most, after which the inspector will return to verify and sign off on the repairs.

Additionally, we’ve agreed to build a fence for the buyer to enclose the backyard and to shield the view of the debris-filled yard of a neighbor behind the house. We’ll had a survey completed this past weekend to determine where the property lines are, and we plan to meet with the buyer and start getting bids to build the privacy fence this week.

The last major hurdle for this sale will be the appraisal, which will hopefully be completed this week as well. Assuming no issues with the repairs, the fence or the appraisal, we’re hoping to close this deal in mid-April, potentially a week or two prior to the contractual closing date of April 28.

It took a few days for them to get up the courage to put in an offer (they are first-time home-buyers, have been looking for a long time, and were hesitant to commit), but after several days, their agent was able to get them to submit a contract. The financials of the the contract — purchase price, closing costs, etc — were very good, but the time-lines were very long, culminating in a closing two months out.

Turns out the buyers are using a local down-payment assistance program, so they are being extra cautious with the closing schedule since those programs are notorious about dragging their feet on underwriting and approvals. The good news is that this is one of those programs where the buyers have to go through financial counseling and are ultimately pre-approved before they ever put in an offer — so the likelihood of the offer actually closing is high.

Ultimately, we countered with a tighter schedule, a bit higher purchase price (to offset the cost of the privacy fence they’ve asked us to install) and a few other minor details. After a couple times going back and forth, we came to terms, the contract was signed, and we are moving forward.

We still have inspections, appraisals and other hurdles to clear, but if everything goes as scheduled, we should close on this property by the end of April. I’ll post more information about contract terms and other details as things progress…

The exterior of the property has undergone a dramatic change. We rebuilt the front steps, painte the exterior and replaced the roof (here is what it looked like before):

And here are the final staging pictures of the house…

The house went on the market today at $115,000 ($5000 less than the first time), we had our first showing this afternoon (which sounds like it went well), and we’ll see how much traffic we get over the next week before we decide if we want to lower the price.

House #1: The Corn House

With the exception of the second new roof (which is going on tomorrow), the second rehab is complete on The Corn House. We spent just under $9000, which is almost exactly what we collected from the lease-purchase tenants in escrow payments during the two years they were there. So, that was a wash. In addition, the $30K we collected in rent payments over two years should about cover the market drop in that area…

My wife spent the past two days staging, and hopefully we’ll have final pictures tomorrow and will get the house listed for sale for the weekend. I’m not optimistic we’ll get a quick sale, but it would certainly be nice — I’m ready to be done with this house. I’ll post pictures of the second rehab and staging in the next couple days.

House #21: The Leak House

Unfortunately, we’re still waiting for the foreclosure deed to get recorded so that we can buy this house. It’s been nearly two months, and we already have a number of buyers interested in this property (they look at The Trifecta House and want one exactly like it). In fact, we had a buyer today ask if they can submit a contract now to hold the house!

There’s no telling when we’ll actually close, those contractually we’re schedule for two weeks from today. As soon as we get that one closed, we’ll do a quick rehab and try to get it under contract with one of the interested buyers we’ve been speaking to.

House #22: The Trifecta House

We’re hopefully in the home stretch on this one. We’re through inspections, requested repairs and the first appraisal, and the second appraisal should be taking place any day now. We’ve left this property active on the MLS to garner some interest in The Leak House for when that’s completed, and we’re still getting a steady stream of traffic from potential buyers.

We’re scheduled to close on the sale of this one next Friday, and once the second appraisal is completed, I’ll talk to the mortgage broker to determine if that’s still realistic. So far, everything has been going smoothly, and I’m hopeful that will continue.

House #22: The Horsey House

We were pleasantly surprised to find out that the sellers for this one are ready to close early. While the contact says March 21, it looks like we’ll be able to close next Monday or Tuesday, which should allow us to complete most of the rehab next week. Since we thought we had two more weeks until closing, we’ve been slow to get contractor bids, so we’re trying to finalize those this week.

I’ll have more to say on this one once we close and get started on the work.