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.

I’d like to say this was a fun project, but after dealing with four different buyers over the past six months, I’m pretty sick of having to deal with or think about this house.

I take full responsibility for this one not closing back in September — had I attended the appraisal for the first contract we had, I most likely could have gotten the appraisal value to the $85K range, as opposed to $65K, which sunk the deal. While it was unlikely we could have ever gotten an appraisal for the original offer price ($99,000), we have since gotten three appraisals in the $85-88K range, and we would have been happy to take that price several months ago.

Also, the appraisals on this property have been much harder since September, when major flooding hit the area, and essentially wiped out 90% of the homes in this subdivision. We were lucky that our survived completely intact, and that future potential buyers weren’t put off by the neighborhood damage.

Here are all the relevant statistics and financial breakdown for this one…

Timelines

The total holding time on this house was a crazy 220 days. It was the second-longest it’s taken us to sell a house, and again made even more disappointing by the fact that we should have been able to sell it at around the 100-day mark.

Here are the key timeline milestones:

• Purchase Offer Date: 5/29/2009
• Purchase Closing Date: 6/30/2009
• Rehab Completion Date: 7/20/2009
• Sale Listing Date: 7/21/2009
• First Sale Contract Date: 8/10/2009
• Final Sale Contract Date: 1/21/2010
• Sale Closing Date: 2/5/2010

The bright side of this whole deal was that the closing time for the contract that finally went through was only 15 days…and this was an FHA buyer! I wish all our buyers could close that quickly…

Financials

From the beginning, we had expected this to be a minor rehab, and were hoping to make a quick $15K return. In the end, it was a minor rehab. But that’s where our correct assumptions ended. We didn’t make our $15K return (only about $12,600). And, there was nothing quick about the sale process. In fact, we were fixing minor issues (like a broken thermostat) up until the past 48 hours.

Here is the breakdown of financials for this project:

There will be a few more small transactions before the numbers are finalized — insurance overpayment refund, final utility bills, etc — but I expect that we’ll be within $100 one way or the other of this final profit amount.

Our ROI on this project was 82% (we only invested about $15K of our own cash in the deal), and our annualized ROI was about 136%. Not bad, even for the long hold-time we’ve had.

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: 32 Days
• Rehab Time: 20 Days
• Selling Days on Market: 184 Days
• Selling Close Time: 15 Days
• Total Hold Time (Close to Close): 220 Days
• Total Profit: $12,604.96
• Return on Investment (ROI): 82.20%
• Annualized ROI: 136.37%

First, the two pieces of good news:

The buyer completed her inspection last weekend, and aside from fixing a couple flooring issues (stain on the vinyl and a bad carpet seam), everything was good. We actually had a the thermostat break after the inspection, so we changed that as well, though I have a feeling it was working just fine for the inspection, so they probably won’t even notice.

The second piece of good news is that the buyer has already completed underwriting on her financing, and wants to close early. In fact, we’re currently scheduled to close tomorrow (Friday). Considering we just got this contract two weeks ago, I’m thrilled we’re already ready to close.

As for the issue I mentioned…in the relative scheme of things, this one isn’t that bad, but still very annoying…

We got the appraisal back on the house, and (of course, given all the other problems we’ve faced) it came in low. Unlike the first appraisal on this house, at least it didn’t come in $30K low…this one only came in $3K low. And even that isn’t as bad as it sounds, given that we had a provision in the contract that said we’d pay less in closing costs if the appraisal came in low.

The other good news is that the buyer doesn’t seem to be upset about the low appraisal, despite the fact that she has to come up with additional closing costs. She quickly signed an amendment agreeing that we’d lower the purchase price to the appraisal price, and we’re still scheduled to sell this one tomorrow.

Ultimately, we’ll lose $1-2K because of this issue, but after all the other issues that have come up in the course of owning this property, I really don’t care. This house and I have had a love/hate relationship, and it’s time for us to part ways…

House #1: The Corn House

According to the credit repair company we have them set up with, the lease-purchase tenants may be close to qualifying for an FHA loan. I don’t know if that’s actually the case, but we plan to have them check in with our mortgage broker first thing next week, and have their credit reports and FICO scores pulled.

Would love to get the house sold to them in the next couple months…

House #12: The Mini House

We have every reason to believe this one should close next Friday. The buyer finished her inspection, and has requested a few minor repairs. Her mortgage broker has told us that she is already through underwriting, and that they are just waiting for the appraisal on the house. While I would normally be a little nervous about the appraisal, the broker has informed us that they service all loans in-house, and therefore have their own appraisers. So, we don’t have to worry about any weird HVCC rules or weird FHA guidelines that could skew the appraisal in the wrong direction.

After four contracts on this one, I’m ready to get this thing closed, and I’m cautiously optimistic it will happen next week…

House #13: The Poor House

We’ve been told by an agent who took buyers to this property last week that we should be getting an offer. Apparently, the buyers’ had a death in the family a day or two after viewing the property, and have been out of town since. Also apparently (who really knows), they have called their agent a couple times to let her know they are very interested in submitting an offer when they return.

Well, they’re supposed to be back today, so we’ll see if we get an offer this weekend. If not, we’ll start doing some heavy marketing next week…

House #14: The Pine House

We replaced the roof on this one already, and would love to start some serious rehab (this will be a huge project), but because we weren’t positive we’d ever own it, we waited until we closed on the purchase before we ordered all the new windows for the house. Because we need the windows before we can replace all the siding, and because we need the new siding before we can do the mold remediation, and because we need the mold remediated before we can do anything else on the interior, we really have no choice but to put off the bulk of rehab until the windows come in.

Hopefully next week…

House #15: The Neighbor House

It doesn’t look like we have much traction trying to wholesale this property (though we haven’t really tried other than posting here on the blog and sending a couple emails to investors we know), and are still trying to figure out the best strategy to pursue here. Right now I’m leaning towards doing a rehab, waiting 90 days to sell, and making a nice profit. While I’d still consider wholesaling for a quick return, waiting a couple months doesn’t seem like a bad option given how easy this one will be to fix up and sell, and how much more we’ll make by rehabbing then we would be wholesaling.

I’ll make a final decision next week on what to do with this one…

House #16: The Probate House

As I mentioned yesterday, we’re in the middle of some reasonable renovations on this house, though we won’t be doing a full remodel. The bulk of the work has been on the exterior, and with all the rain we’ve received the past couple weeks, things have gone a bit more slowly than I was hoping. That said, I expect this one to be completed early next week, and we’ll start marketing it.

My wife wants to initially list it considerably higher than I want to, mostly because I feel like we should under-price it given that we didn’t do a full remodel. But, my wife is likely correct that even at her higher price, the new owner will be getting a great deal given the location and the size of the house. She’s usually right about most things, so I’ll probably relent (or just try to get her down a bit).

My goal on this one is a quick sale…the house is about 30 minutes from where we (or our project manager) lives, so going back and forth won’t be fun for very long…

Staging

Because my wife does most of her staging on contingency (meaning she only gets paid if the property sells while staged), we’re always happy when a staging project gets sold.

The investor who owns the Staging #2 project has indicated that he has gotten a lot of good feedback on the property and is currently negotiating a contract. Given the numbers he mentioned to me, I’m not sure if he and the buyer will be able to come together on price, but we’d love for him to make a relatively quick sale on this property.

The same investor owns the Staging #3 project, and I’m thrilled to say that that one is currently under contract and scheduled to close in two weeks. Not only will getting paid on this job be nice, but it will be nice to get the staging furniture back to use on another project.

Mobile Homes

I’ll have more to say in a future post, but there is a good bit going on with the mobile home business.

The buyers for MH #1 didn’t pay January rent, so we may have to start repossession (they still have a couple days before we kick them out).

The buyers for MH #2 and MH #3 are still paying on time.

The buyer for MH #4 bounced his down-payment check, and quietly agreed to leave. Looks like we’re going to turn around and sell this one for cash for a quick profit.

We have MH #5 purchased…more on that next week.

That’s it…have a great weekend!

I’m not too surprised…we’ve had a ton of interest on this property since we put it on the market last summer, and if it weren’t for stupid mortgage brokers, idiot buyers, and bad appraisers, we would have had it sold a long time ago. Not that I’m assigning blame…if we would have demanded larger deposits from our buyers, we would have made a good bit of money from everyone who couldn’t get their loans closed. So, in the end, it was our fault for not profiting on the previous contracts.

Anyway, back to my point — we have our fifth offer (and our fourth contract) on this house, and hopefully the fifth/fourth time is a charm. The offer is very similar to the third offer in terms of price and terms, with a one week inspection period, and a two week appraisal period.

The buyer will be putting down $1000 deposit, and will need to put down another $1000 by the time the inspection and appraisal periods are complete. The $2000 deposit will comprise nearly their entire down-payment, so hopefully that will be enough incentive for them to stay on top of things and get this purchased closed.

I’ll have more to say next week after the buyer has a chance to complete inspections and get rolling on their financing…

So, long story short, she wasn’t able to close last week, we will get her $1800 deposit as compensation, and we will be putting the house back on the market…

After several failed contracts on this house, I’m starting to wonder why I thought this would be such an easy sale. The price is great, the house looks fantastic, and there are plenty of interested buyers; but, it never seems to work out.

This buyer (and her agent and mortgage broker) seem to believe that they can fix the credit issues in the next week or two, and I’ve promised them that if they can fix the problem and if we can negotiate a new contract, that we’ll credit the $1800 in deposit money to her next deposit. I’m certainly not holding my breath though…

In theory, we have a lot of closings coming up next week:

• House #12: The Mini House: The buyer now has an $1800 deposit riding on her being able to close her loan by the end of this week. We haven’t heard anything yet, and have decided that we aren’t going to press the agent any further. Assuming they are ready to close on Friday, we will probably push it to Monday, when we’re back in town. If they’re not ready by Friday and ask for another extension, it’s going to cost them even more.
• House #14: The Pine House: Closing is scheduled for Tuesday. We got into a big fight with the listing agent on this one, as we wanted to terminate the agreement given it’s taken so long to close and the mold problem has gotten worse. The agent basically said that — according to the contract I signed — the seller was entitled to keep our deposit if we back out, even if the seller misses the closing date. Unfortunately, the wording in the contract is such that I don’t know if we’d get our deposit back or not if we decided to fight it (my attorney is trying to decipher the legalese), so we’ve decided to just move forward with the closing, and eat the couple thousand dollars extra it’s going to cost us. Closing is scheduled for next Tuesday.
• House #15: The Neighbor House: Closing on this one is scheduled for next Friday. As far as we can tell, everything should go smoothly.
• House #16: The Probate House: We turned the contract in to the closing attorney this past Monday, and by Tuesday afternoon, we had clear title and were ready to close. All the closing attorney is waiting for is some info from the seller, and we should be good to go. I expect we’ll close this one on Monday.

Well, as of 11am this past Friday morning (the day the contract expired), the buyer’s agent was still convinced we’d have the house closed by the end of the day. Of course, title hadn’t been pulled, HUD statements hadn’t bee prepared, the closing attorney didn’t have the loan package, and a closing hadn’t been scheduled, but apparently the buyer’s agent thought all those things were minor details that could be resolved in 5 hours…

We told the buyer’s agent that we were greatly annoyed that she didn’t stay on top of things and said that we were refusing the extend the contract; we were planning to keep the buyer’s $500 deposit and put the house back on the market. The agent was horrified; she said that it wasn’t the buyer’s fault that the house didn’t close, and that the buyer shouldn’t be penalized. I reminded her that it was actually HER fault the deal didn’t close, and said that she could explain to the buyer what happened.

The agent asked if there was anything we were willing to do to extend the contract another week. We told her that if the buyer would put up the rest of her downpayment as a non-refundable deposit (another $2400), that we would extend the contract for a week.

The agent refused and said, “I can’t ask the buyer to put up another $2400 when we’re not positive the deal is going to close.” I told her that I could completely understand that, but that had she done her job, this wouldn’t have been an issue. I also pointed out that we had had the property off the market for 10 weeks and were only getting $500 for all our lost time and costs, and that if she really wanted another extension, I wasn’t going to be the one taking the most financial risk.

Ultimately, we got the buyer to agree to put up another $1300 for a one week extension to the contract. They have until this Friday to close the deal, or we will keep the $1800 deposit and put the house back on the market.

We’re generally the nice ones when it comes to giving in to buyer requests; but after being screwed over and over by buyers who don’t really appreciate our niceness, it’s time to push back and ensure that we get compensated when our buyers can’t follow-through on their commitments.

As for the two houses we’re scheduled to buy — The Pine House and The Neighbor House — there is no new information. Neither closing has yet been scheduled, but given the holiday weekend coming up, we’re okay with that. We’ll dig in on these next week.

As for The Poor House, the elderly buyer who appeared to be a lost cause is now just probably a lost cause. The buyer’s agent is still working hard to make the deal work, and the latest request we have is that the buyer wants us to install hardwoods in parts of the house (apparently, he’s wanted this the whole time, but the agent convinced him not to ask us for it).

The concession we made was that we’d get a hardwood quote for what the buyer wants, and would provide an allowance to him at closing so that he can install the hardwoods himself after the house is purchased. In return, we’ve told the buyer that the house needs to close by mid-next-week, or the deal is off. If he decides to go through with the purchase, we’ll lose about $3K in profit for the hardwood allowance, but the house will be sold next week (and we’ll still make a very nice profit). Otherwise, we’ll be able to put the house back on the market next week, and know that we did everything we could to try to make the deal work.

I’m giving it a 20% chance of actually closing with this buyer, but that’s better than what we were looking at last week (and the house is back on the MLS in anticipation of it not closing).

As for The Mini House, it appears that we got the buyer’s agent and the mortgage broker in a frenzy by telling them we refused to extend the contract past next week’s expiration date. They know they screwed up by dragging their feet, and they know that if they don’t get it closed by next week, the buyer will lose her deposit, inspection and appraisal fees because of their laziness; so, things are starting to move on this one.

The appraisal was completed within 24 hours of my discussion with the broker, and the buyer’s agent is convinced we’ll have a closing scheduled by mid-next-week. Again, I’m not confident it’s going to happen, but it appears slightly more likely than it did earlier this week.

That’s all I’ve got…HAPPY NEW YEAR TO ALL MY READERS!

We were scheduled to have four closings this week — the sale of The Poor House and The Mini House and the purchase of The Pine House and The Neighbor House — but it looks like we’re not going to have any closings at all.

The Poor House is the greatest frustration this week. The buyer was ready to close last week, and was standing in the bank to get a cashiers check for his downpayment, when his mortgage broker scared the hell out of him and made him change his mind about buying a house. The abbreviated story is that the buyer is a 76-year old man who has never purchased a house before. He is already distrusting of those in the real estate business as is, but when his broker confused him about how to provide funds for the closing (he was originally told to get a certified check and then was told to wire the funds), the buyer decided that everyone he was dealing with was a crook, and became terrified of completing the transaction.

Long story short, his agent is still desperate to get this deal closed, but we’re pretty certain that this guy won’t be buying a house any time soon, so we’ve put The Poor House back on the market. Unfortunately, all the staging furniture has already been moved out of the house and into Staging Project #3, so the house is currently not staged. We’ll decide sometime in the next few days what our plan is to restage it (or not).

The Mini House was scheduled to close on Thursday of this week (tomorrow). We knew that the appraisal hadn’t yet been completed (the appraiser would have had to call us just to get into the house), but the mortgage broker, buyer’s agent and buyer were all convinced that it had. Yesterday, I called the broker, and asked if the closing was going to be scheduled for Thursday, knowing that it wouldn’t be. He said he was just waiting for the appraisal to be uploaded into the system and then the closing would be scheduled.

Instead of arguing, I just said, “Okay, let me know when the closing is scheduled. But, if it doesn’t get done by this Thursday — the contractual closing date — we’re going to put the house back on the market and keep the buyer’s deposit.” Within a couple hours, I received a flustered call from the buyer’s agent, who explained that there had been a mix-up and that the appraisal hadn’t been completed yet (surprise, surprise), and that the appraiser would be out to the house within 24 hours.

The buyer can extend the contract closing date by 7 days one time without our permission, so they actually will have until next Thursday to close, and I know they are scrambling to get it done before then. If they don’t hit that date, I’ll happily keep the buyer’s deposit and put the house back on the market. We went out of our way to help this buyer, and they couldn’t be bothered with keeping on top of the loan, so I won’t feel bad if they don’t get the property; I have a feeling we can make more money if we end up re-marketing it.

As for the two houses that we were scheduled to close on the purchase of, those didn’t happen either…

The Pine House was scheduled to close on December 18, but we’ve obviously missed that date. With the mold continuing to grow in the wet weather, we’ve requested that the seller reduce the price given the delay in closing. We haven’t heard back, but depending on the seller’s answer and when they think we’ll close, we will decide what to do.

The Neighbor House was scheduled to close today, but that’s not happening either. No word on when the closing will actually be scheduled, but my guess is either next week or the following.

So, it looks like our fun, busy week has turned into a frustrating, nothing-much-to-do-except-wait week…oh well, such is this ridiculous business sometimes…