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.

As you might recall, this house has been under contract since renovation began; my project manager (who is my brother) and his fiancee decided they wanted to buy the house, and spent the better part of the past three months customizing the house for their liking.

The deal from the beginning was that we’d sell the house for just $10K over our cost, so they had a fixed budget with which to do whatever renovations and remodeling they wanted to do. Their budget was about $68,500, and they used every penny. In the end, our profit was $10,013.12…we can use the extra $13 to buy them a house-warming present…

Anyway, here are all the relevant statistics and financial breakdown for this one…

Timelines

The total holding time on this house was 114 days. We had hoped to close quickly after the 90 day FHA mark, but there were some snags with the loan, and it got pushed out a couple weeks.

Here are the key timeline milestones:

• Purchase Offer Date: 5/15/2009
• Purchase Closing Date: 6/24/2009
• Rehab Completion Date: 9/8/2009
• Sale Listing Date: 7/8/2009
• First Sale Contract Date: 7/8/2009
• Final Sale Contract Date: 7/8/2009
• Sale Closing Date: 10/16/2009

Financials

Like I mentioned, our goal was to make a $10K profit on this house. We pretty much nailed that number, which is great. While I feel a little bad making any profit off my brother/employee, I think everyone feels this was a great deal all-around. He got to devote about 2 months specifically towards customizing his house (we didn’t do much else during this time period for a number of reasons), he ultimately purchased the house about $15-20K below market value, and the company made a profit on the resale.

Here is the breakdown of financials for this project:

There will be a few more transactions around this house — insurance overpayment refund, final utility bills, etc — but I expect that we’ll be within $50 one way or the other of this final profit amount.

While it doesn’t really matter to us for this project, our ROI was about 22%, and annualized it worked out to about 72%.

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: 40 Days
• Rehab Time: 85 Days
• Selling Days on Market: 0 Days
• Selling Close Time: 100 Days
• Total Hold Time (Close to Close): 114 Days
• Total Profit: $10,013.12
• Return on Investment (ROI): 22.43%
• Annualized ROI: 71.82%

This time, the broker seemed a good bit more careful, and it looks like we’re close to getting the deal closed. The FHA underwriter had some questions about the appraisal and our repairs, and the appraiser apparently did a good job of responding to the issues. The underwriter came back again yesterday with some minor follow-up issues, and we hope that once those are addressed (this week), we’ll get a clear to close on the sale of this property.

While I don’t want to count my chickens to soon (and neither does our buyer), we’re hoping we can get to the closing table by early next week…

On the exterior, we replaced the roof and gutters, replaced about 40% of the siding/trim/sills, rebuilt the back deck, added a fence around the large backyard, cut down some dead trees, landscaped the entire property, and replaced the garage doors. On the interior, we basically rebuilt the house from the studs, including a lot of mold remediation, a new kitchen, new modern bathrooms with a tiled shower and jacuzzi tub in the master, new hardwoods/vinyl/carpet, all new plumbing, all new HVAC, and new plumbing and electrical fixtures. We also finished out the basement room by adding a large window, making it an official bedroom.

Here are the AFTER pictures of the renovation…

The only thing that I personally would have done differently would be to have chosen a different exterior paint color; the new color is very close to the original, which somewhat detracts from the magnitude of the remodeling. That said, the new buyers loved this color, so we were happy to oblige their choice. We’re hopeful that they will be able to close on the house at the end of the week or early next week, as they’re anxious to move in and we’re anxious to move on.

The lender had already done two appraisals and the underwriter was in the process of verifying the source of the down-payment funds when he realized that the buyer’s fiancee (my project manager) worked for the company selling the house (he noticed the direct deposits of his paycheck from my company into their joint savings account). The underwriter determined that this violated their rule of an “arm’s length transaction,” and essentially told them that they wouldn’t finance the purchase!

While the underwriter can do whatever he wants, it’s unfortunate that he made this decision. First, the buyer is technically my project manager’s fiancee, who has absolutely no relationship to the company. Second, even if the buyer were my project manager, the fact that he has no ownership in the company should mean that this would be an “arms length transaction.” In fact, there are specific FHA rules that state that an employee of a home builder can purchase a house from the company assuming he has no ownership in the company. While we’re not technically a home builder, the relationship is exactly the same.

Anyway, like I said, you can’t argue with the underwriter — at least not successfully. So, my project manager and his fiancee are now scrambling to restart their financing with another lender who hopefully will interpret the rules a bit accurately and not have issue with this relationship. Unfortunately, this is turning what should have been a great week — we have four properties under contract — into a bit of a frustration for everyone involved. These guys have worked hard on getting this house customized to their liking and are ready to move in, and now poor interpretation of the financing rules is getting in the way of their moving in and enjoying what will hopefully soon be their new home.

Hopefully my next update on this new saga will have a happy ending…

Anyway, I think it’s been about a month since I’ve done a general update on all the properties and business activities, and with everything going on, I feel like I’m falling behind by only posting on one topic per day. So, here’s an update on where each of the properties stands, and what is going on with the business:

House #1: The Corn House

We have our lease-purchase buyers working with our credit repair company, and I’m hopeful that by the time their purchase option expires (February 2010), they’ll have their credit to the point where they will be able to purchase the property.

The husband has been very diligent about keeping in touch with the credit company, doing his part and working hard to get his creditors paid off. And the credit company is doing their job, appealing all the the issues that have come up on the credit report, and giving our buyers good advice on where to focus their payments and their efforts.

I still have no idea if these buyers will ever be able to actually purchase the property, but I know they want to and are working hard to get there.

House #6: The Red Garage House

This property has been the bane of my existence the past several months. We’ve already received four offers, had two contracts, have gotten four appraisals, done two inspections, and we just can’t seem to sell this thing! Unfortunately, both buyers who had contracts couldn’t get their financing done, so the house is still sitting, and every day it sits on the market, it starts to look less and less desirable to buyers who wonder what’s wrong with it.

We actually just dropped the price a bit (to $107,500), and did some heavy marketing over the weekend, and we’re seeing a few potential buyers coming to look at it so far this week. So, hopefully we’ll find someone interested very soon. If not, I’m planning to greatly reduce the price in a week or two, to the point where we can quickly move this one. I hate having cash and credit tied up for more than 4-5 months at a time, and this one just hit six months.

House #8: The 16-Bid House

This one is under contract, and we have a closing scheduled for Friday afternoon. The buyers have until midnight tonight to do their inspections, but it doesn’t look like they plan to actually do one. I still don’t know if they’re planning to use the house as their primary residence or if they plan to hold it as a rental, but either way, I think they’re getting a great deal, and I’ll be happy to get this one off the books at the end of this week.

House #11: The Sunglasses House

The rehab on this one is pretty much complete (final pictures/video coming soon), and now we’re just dealing with the final inspections. Last week, we failed both the final plumbing and final HVAC inspections. Of course, both our plumber and HVAC guy disagreed with the reasons for the failures; but ultimately, the inspectors are going to get what they want, so both companies came back out to make the required changed.

As of today, we’ve now passed all of our rough inspections, and have passed our final plumbing and final electrical. Our HVAC guys should be finishing up their work this week (they’re waiting for a part to come in), and hopefully we’ll get signed off on the final HVAC inspection by the end of the week. That just leaves our Certificate of Occupancy (CO), which is the final overall inspection, at which point we’ll officially be done.

This house is being sold to my brother and his fiancee, and because it’s an FHA loan, we can’t close until after we have owned it for 90 days. My brother’s lender has been able to push most of the preliminary loan work through already, and thinks that they could possibly close within 1-5 days of hitting the 90-day mark! In fact, we’ve already had two appraisals (both came back well-above the purchase price), and because we will have an CO, we don’t need an FHA inspection.

It’s possible we could close on the sale of this property as early as mid-next-week…but anytime in September would be fantastic…

House #12: The Mini House

We just got a final contract from the couple who put in an offer on this house last month. They were forced to wait until this month to start the financing process, due to the FHA 90-Day Rule, so we didn’t formally accept their offer last month, and hadn’t spoken with them in a few weeks. We can’t formally sign the contract until we hit Day 91 (end of September), but we’ve verbally accepted, and assuming no financing or appraisal issues come up, I think we have our buyers!

The buyer’s lender thinks they could be ready to close in early October, so this could be another property we get sold in the next few weeks…

House #13: The Poor House

We’re schedule to close on the purchase of this one next week, and are just starting to put together our budget and our contractor list. It looks like this is going to be a more expensive project than we had anticipated, as we finally figured out the source of all the mold in the basement. Apparently, one corner of the basement has some serious water-proofing issues that we’ll need to rectify before we can start on our cosmetic renovations.

We got our water-proofing company out to give us a quote on the work, and he came in at around $7K for what he recommended we do. I very much trust their opinion, but for this price, we needed to get a few more quotes, so we called a couple more water-proofing companies. We’ll get three more bids this week, and hopefully we can get that price down a good bit. Unfortunately, I don’t know much about water-proofing, so it’s going to be a tough area for us to negotiate.

In addition to a full cosmetic makeover on the interior, we’ll also be replacing all the siding and the roof on exterior of this house, so overall this is going to be a big project. This rehab will likely come in around $50K, but we’re picking up the house for a great price, so hopefully we’ll still be able to make a decent profit.

Mobile Home #1

We’re meeting with the mobile home (MH) buyers for MH #1 this Friday to get all the contracts signed, collect the rest of the down-payment and then let them move into the property. This first sale was almost too easy, but we’ll see what happens. Worst case, they don’t pay their mortgage payments and we need to repossess, but with their $500 down-payment, we’ve already collected 25% of our purchase price back.

After doing some further research, we’ve realized that in order to buy and sell MHs in Georgia, we need a dealer/broker license. This is going to take a couple weeks to get and is going to cost us $200, but if we’re going to make this a long-term business, we should be following the rules. Of course, this now brings up the issue of having to collect sales tax from the buyers, and creates a whole lot more paperwork for the business, but I guess that comes with the territory.

Anyway, that’s it for today…more tomorrow, unless the baby decides he ready to join us…

As I mentioned previously, my brother/project manager is buying The Sunglasses House. Normally, we’d be waiting until the 90-day FHA seasoning was completed before we submitted a contract and got the mortgage paperwork started, but we’ve found a new broker who is able to get all the paperwork started prior to the 90-day mark, and can close within a week after the 90 days. And not only can this broker get the paperwork started, but he can also order the appraisal(s) on the property before the 90 days are up.

Well, we didn’t expect it, but about an hour after my brother got the loan paperwork into the broker, the broker ordered the first appraisal. And about an hour after that, the appraiser called us to schedule the walk-through for tomorrow.

Normally, this would be great. But, the problem is, we’re still not done with the house!

All the big stuff is done, but there are still a lot of little things that make the house look less than perfect. For example, not all the switch plates and outlet covers are on; the jacuzzi tub hardware hasn’t been installed; the mirrors haven’t been hung; and the hardwood floors are a mess until they get their third coat of polyurethane.

We don’t want to put the appraisal off, as this would likely annoy the appraiser, but we’re also not thrilled that she’ll be walking through the house with it in less than 100% finished condition. Hopefully, she’ll understand that she caught us a bit by surprise, and will not hold the little stuff against us. Had we been more used to people actually being competent at their jobs (like our new broker and the appraiser are being), we would have been more careful to make sure the appraisals were put off another day or two.

I guess we’ll see what happens!

Now, I wanted to give a general update on what’s going on with all our properties, and our search for more properties…

House #1: The Corn House

We were hoping to close on the lease purchase of this house at the end of this month, but given some recent events, I’m pretty sure that won’t be the case. First, the buyers were supposed to contact the lender at the beginning of the month to get their credit pulled and see if they were close to qualifying for the FHA loan they’d need to close on the house. They didn’t actually contact the lender until just the other day, so we don’t know if their credit has improved or not, and even if it has, there’s little chance we’ll be able to hit an end-of-month closing.

Additionally, the buyer’s rent check bounced this month. This is the first time this has happened, and while they were tremendously apologetic and immediately got a cashier’s check for the balance owed, it didn’t provide me any more confidence that they have their finances in order.

Tomorrow, we will speak with the lender about where their credit is, and we also have a meeting scheduled with the buyers to discuss next steps. Assuming they won’t be able to close on the house before the contract expires on 8/31, we need to figure out what we won’t to do with them. Our two most likely options are: we could cut them loose, and put the house back on the market; or we could extend their lease purchase for another several months. Considering we’re making great money off the lease purchase (both the rental income and the monthly option fee that we’ll keep if they can’t close), extending their contract probably isn’t a horrible financial decision.

That said, we still have $100K of our own cash tied up in this property, and with them bouncing their rent payment this month, I’m a little concerned about future payments. My wife and I need to sit down tonight and figure out our strategy before tomorrow’s meeting.

House #6: The Red Garage House

The Red Garage House is under contract again! We received two offers at the end of last week, and one seemed much more likely to result in a smooth closing than the other, so we pursued that one. The buyer immediately accepted our first counter-offer, and now has 7 days to complete their inspections and any other due diligence they want to do. We provided them a copy of the Inspection Report from the first set of buyers we had on this house, so they may not even choose to have another inspection on their own.

That said, it’s an FHA loan, so the lender will want to do an FHA inspection, and will also need to do at least one — and probably two — appraisals. I expect those to happen later this week, and assuming we don’t run into any appraisal issues, we’re scheduled to close on the sale of this property on September 7.

House #8: The 16-Bid House

It’s now been 24 weeks since we got this one under contract to buy, and we still don’t have a closing scheduled. At this point, I’m fairly certain they won’t get the title issues resolved anytime soon…while there is no possible title issue that should take this long to clear, my guess is that Fannie Mae (the seller) is just very backed up in resolving their title issues.

The contract expires for the 5th time at the end of the week, and assuming the seller doesn’t back out, we’ll just sign another extension. This time, I may ask for some of my earnest money back (we have $10,000 tie up in earnest money), though I don’t expect them to be reasonable about it. Between the listing agent and the seller, nobody’s been very reasonable in trying to help us with this deal.

Anyway, there’s nothing more to say here…it’s still just wait-and-see…

House #9: The Hat Trick House

After several delays due to RESPA regulations, we finally close on this house first thing Monday morning. It feels like forever since the last time we closed on the sale of a house, so I’m pretty happy about this one.

We moved all the furniture out the house on Friday, and we’re meeting the buyer and her agent over there right before the closing to do a final walk-through. The only issue that needs to be fixed is a roof problem that the inspector found a couple weeks ago; apparently the roofing company knocked out a piece of soffit at the top of the roof during the maintenance they performed, and just need to come out and reattach it. They’ve been putting off coming to fix it for two weeks, and with the walk-through scheduled for 9am, we’ve told them they better get it done very early so that the buyer doesn’t complain.

More on this after the closing…

House #11: The Sunglasses House

This one is almost finished. The oak hardwoods went in last week, and all that is left is the kitchen cabinets, a bathroom vanity, carpet, finish plumbing, and new garage doors. Hopefully all of that will get completed this week, and then it’s just the little stuff, like door knobs, switches and new outlets.

This project is going to end up going about 8 weeks (a week or two over schedule) and will end up costing about $65K. The results are fantastic.

I plan to do another video this week, so stay tuned…

House #12: The Mini House

We have buyers for The Mini House all lined up. After some back and forth with counter-offers, we finally came to agreement on terms and everyone is happy. Unfortunately, though, it’s an FHA purchase, and the buyer’s lender has informed us that they can’t even put the house under contract until after the 90 day seasoning period, which ends on September 26. That means we’d likely close mid-October at the earliest.

We’ve told the buyers that, as long as we don’t find another buyer who can close significantly sooner, we’ll hold the house for them. I figure that if we don’t find a buyer who isn’t subject to the FHA seasoning before mid-September, we’ll get the ball rolling with these buyers and have them start their due diligence. That way, by the time they sign the contract, we can be sure they they’ve completed their inspections and are ready to move forward as quickly as their lender can do it.

Making Offers

My wife and I spent about 8 hours today checking out properties, as we’re ready to purchase a few more. Unfortunately, we weren’t thrilled with the inventory that’s out there right now. We did find a couple houses that we plan to put offers in on tomorrow, and hopefully there will be some new listings in the coming weeks that are attractive investments.

That’s it for now…more tomorrow…

This past week, we’ve completed the interior painting, finished reglazing and repairing all the windows, installed the vinyl flooring in the bathrooms and laundry room, installed most of the light fixtures, installed the air conditioning and furnace, installed a drop ceiling in the laundry room, and installed the new double vanity in the master bathroom.

Here’s a video update of our progress:

In the next week or two, we’ll finish the flooring (hardwood and carpet), install the kitchen cabinets, do the final plumbing, and then knock out the remaining little finishing details, like the mini-blinds, door-knobs, switches, outlets and registers.

By the end of the week, the painting should be complete, the reglazing of the windows should be done, the light fixtures should be installed, and we should be ready for the HVAC installation, the cabinets, the flooring and the finishing touches.

We also had a survey completed this week, and found out that the lot is over half an acre. Once the privacy fence went in, we really exactly how big the lot was; the fenced area is huge, and half the lot is still outside the fence.

Here are some pictures of what’s been done since the last video was posted:

Back View of House

Tiled Fireplace (partially covered for painting)

Tiled Shower (almost complete)

View of House From Backyard

View of Backyard from Back Deck

View of Backyard from Upstairs Bedroom

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