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.

This was supposed to be a quick wholesale deal to another investor (i.e., no rehab work on our part), but it ultimately took nearly two months. We found buyers for the property relatively quickly (two investors looking to try their first flip), but they had some issues with their financing. Their first loan fell apart due to some issues with the way their broker was charging fees, and their second loan dragged out for several weeks before they realized there was an issue. It turns out that they had applied for a non-owner-occupant investor loan, which is essentially a loan for a rental property. Given this was a flip project, the lender wasn’t happy about the fact that the house needed so many repairs, and the loan pretty much stalled.

Earlier this week, the investors decided to pay cash instead of trying to get the loan, and we closed this afternoon.

Had I known they were attempting to get a “rental property” loan, I would have advised them several weeks ago to go the cash route…trying to get typical investor loans for flip properties is always a long and difficult process. The worst part is that due to the long delay waiting for their financing, the buyers have pushed out starting the rehab, and have likely pushed the listing of the property out to near the end of the tax credit period (April 30), which will make it much harder to sell the property. I hope that’s not the case, but certainly come May 1, it’s going to be tougher to find buyers.

Here are more detailed breakdowns of our final schedules and financial results for this wholesale project…

Timelines

The total holding time on this house was 53 days. Had the buyers paid cash upfront instead of trying to get financing, it would have been closer to 20 days, which is what I originally had expected. It was a good lesson learned about ensuring wholesale buyers have their financing in order.

Here are the key timeline milestones:

• Purchase Offer Date: 12/19/2009
• Purchase Closing Date: 1/25/2010
• Rehab Completion Date: 1/25/2010
• Sale Listing Date: 1/26/2010
• First Sale Contract Date: 2/16/2010
• Final Sale Contract Date: 2/16/2010
• Sale Closing Date: 3/19/2010

Financials

This was a pretty standard wholesale deal in terms of profit for us, though as mentioned above, it took longer than expected to complete the deal.

Here is the breakdown of financials for this project:

Our ROI on this project was 41% and our annualized ROI was about 286%.

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: 46 Days
• Rehab Time: 0 Days
• Selling Days on Market: 21 Days
• Selling Close Time: 31 Days
• Total Hold Time (Close to Close): 53 Days
• Total Profit: $6,864.66
• Return on Investment (ROI): 41.53%
• Annualized ROI: 286.00%

Turns out that all three properties that we have under contract to sell had an appraisal yesterday, and two of them were last-minute, meaning we didn’t have much time to prepare and we had to stick around to meet with the appraisers…

We knew the appraisal for the sale of The Neighbor House was going to happen yesterday morning at 9:30am (we scheduled it last week), so my project manager was scheduled to take care of that one. This is pretty much a wholesale deal and the property is practically move-in ready, so there isn’t too much concern about this one not appraising, especially given the comps in this area.

We received a call from the buyer’s mortgage broker for The Poor House the other night. She mentioned that — given it was an FHA sale — we’d need to get a second appraisal. We pretty much expected a second appraisal from the beginning, but when the appraisal wasn’t mentioned earlier, we assumed the underwriter wasn’t requiring it. Turns out they just didn’t catch it until now, so they quickly ordered the second appraisal and told us the appraiser would be in touch.

At 10am yesterday morning, he called an said he’d be at the property at noon. He asked a few questions, finished quickly, and let me that he’d already pulled comps and that he didn’t expect any issues. So, that’s good news.

The less good news is that the mortgage broker mentioned that the underwriter was grumbling about the fact that we’re selling the property so much above our purchase price, so I spent a couple hours putting together a full breakdown of all our costs and analysis of our likely profit. Hopefully when he sees that much of that $100K between purchase and sale price went to rehab and other expenses, it won’t be an issue.

We also got a call from the first appraiser on The Poor House yesterday, who told us that his appraisal was being questioned by the bank, and that he had to revise his list of comps. Luckily, there is a brand new (very good) comp for that house that just showed up last week, so he isn’t expecting any issues with the revision. Looks like this is going to be one of those difficult sales, right up to the closing…

The third appraisal we had yesterday was on The Probate House. The broker mentioned a few days ago that he ordered the appraisal, and the appraiser called us yesterday morning as well. He said he’d be at the house around 11am, right between the other two appraisals. So, my project manager ran up to that house as quickly as he could and met with that appraiser. Long story short, we expect that house to appraise without any issues (it’s priced at least 15% below market), but we’ll also have to get a second appraisal on that one as well, given it’s also FHA.

All-in-all, it appears we had three successful appraisals yesterday, and if that’s the case, it was a very good day…

House #1: The Corn House

We found out that the lease/buyers for this house haven’t been paying off their credit card each month like the credit repair company suggested. They likely would have qualified last month if it had not been for that, but now they’re likely still a month or two away, best case.

The contract for this lease-purchase expires this weekend, and we met with the buyers last night. We agreed to extend the contract one final time, until June 30 of this year. That means that if they can get the house closed, they’ll still qualify for the $8000 tax credit as well. If they can’t qualify by June, we’ve informed them that we won’t be extending again (we’ve already extended three times).

So, if this one isn’t sold by June 30, we’ll be taking the $7800 that we’ve collected in escrow money and using it to fix up the house and put it back on the market.

House #13: The Poor House

The buyers had their inspection earlier this week, and only came back with a few requests for minor issues (squirrels in the attic, minor shower leak, mis-wired outlet, etc). We are now just waiting for the appraisal to come back, and assuming everything is okay with that, we expect to get this one closed in the next two to three weeks.

House #14: The Pine House

Wow, this one has been a crazy rehab so far. We completely gutted the exterior, ripping off all the siding, trim, soffit, fascia, gutters, roof, and windows, rear deck, and replaced everything. In the process, we realized that there was some termite damage and wood rot to a couple support joists and that the entire chimney was rotted away. So, we replaced a couple beams and completely ripped off and replaced the chimney.

Once the exterior was finished, we brought in the mold remediation company who gutted the entire exterior, and had to remove about 50% of the sheetrock in the house for remediate the mold. It will take another day or two to finish the mold work, but starting next week, we will be rebuilding the interior.

Based on some surprises we’ve found (the extra structural work, the extra mold remediation, etc) we’re probably about $5K over budget on this one…which is too bad considering our profit was thin to begin with. We won’t know until we put it on the market, but hopefully we’ll be able to sell this one for our projected price, or we may be working on our first break-even project. The worst part about that is that this has been our biggest rehab to date, so it’s taking a lot of time and energy.

House #15: The Neighbor House

The buyers for this property are going through the process of trying to secure their loan. Their first lender couldn’t get the job done, but they’re confident that the second lender will.

Currently, the closing is scheduled for March 17.

House #16: The Probate House

This house has been on the market for nearly two weeks without an offer. We’ve had tremendous interest (as expected, given our pricing it well below market), but the very specific back-yard — it has a waterfall and lots of custom landscaping — and the fact that it’s on a main road have turned off several buyers. My wife has always believed that this house will be perfect for a couple with no kids (since there’s no good back yard play area) or a retired couple, and it’s becoming obvious that she’s absolutely right (as usual!).

We have two agents telling us that they have very interested buyers, but until we see an offer, it doesn’t really mean much.

In the meantime, there was a horrible smell coming from one of the back bedrooms in the house. We had our extermination company investigate, and they found a dead squirrel in the attic. The squirrel was probably in there when we were rehabbing the house, and our contractors probably sealed it in when they were replacing damaged fascia boards around the roof-line.

Poor little squirrel…

There’s plenty more going on with the staging business, the mobile home business, and other ventures we’re pursuing, but I’ll save that for future posts…

At this point, I have mixed feelings about selling this house (it would be an easy flip), but the buyers seem excited, so that makes me happy. The buyers are an investment team from Atlanta who own a couple rentals between them and are looking to flip their first house. They don’t have any renovation experience, but are very eager to learn. Over the past couple weeks, we have been working with them on inspections, putting together a detailed scope of work, getting contractor bids, and scheduling the rehab process.

The buyers plan to do a full rehab on this house despite the fact that a minor rehab might be a bit more profitable; I can certainly understand this, as the first house we renovated, I couldn’t have imagined leaving anything undone. Knowing the optimal amount of rehab is one of those learning experiences that takes a couple projects to really get your head around, but in this case, I don’t think a full rehab is a bad thing. We’ve also found a couple little surprises that have increased my original budget estimate — the roof has some major hail damage and needs to be replaced, and the siding needs a bit more work than I had expected.

In addition to using mostly our contractors, we plan to continue to help the buyers through the entire flip. The Pine House is right around the corner, so our project manager spends a good bit of time in this neighborhood and will help manage the project. And when the renovation is completed, my wife will be acting as the listing agent, and will be staging the house for sale.

The funny thing is, because we’ve been walking the buyers through the process in a somewhat formal way (documenting everything, getting written bids, creating spreadsheets, etc), we’ve already done more work on this house than we would have if we weren’t selling it. And we’ll probably do more work during the rehab in terms of management and mentoring as we would have if we were flipping it ourselves. And all for less profit than we would have made if we flipped it ourselves!

But, in the end, if the buyers are able to walk away with a ton of experience, a list of good contractors and some extra cash after one project, I’ll be very happy. In fact, I remember the guy who sold (wholesaled) us our very first property (The Corn House) — had no problem telling us any lies he needed to in order to get us to make the purchase. My goal is to be the exact opposite of that guy…

Btw, we’re scheduled to close on the sale on March 10…

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!

While it took about a month past the original closing date, everything went pretty smoothly. I was planning on closing this one with a loan, but the title company pulled a short version of the title, and my lender wouldn’t finance the property without the long-form title search (they didn’t want to find problems down the road).

Long-story short, I ended up closing with my own cash, and my lender agreed to refinance the property with their own attorney and title company this week.

Also, if you recall, I was looking to wholesale this deal to another investor because of the deed restriction imposed by Fannie Mae (the seller). Basically, the restriction says that I’m not allowed to sell this property for at least 3 months if the sale price is over 20% above my purchase price.

Well, it looks like the closing attorney forgot to add the restriction onto the deed, so from the perspective of whoever handles my sale, they won’t know that there is any restrictions. That said, while I could probably get away with selling this property whenever I want and for however much I want, I do run the risk of Fannie Mae coming back and enforcing the restriction later (if they ever figured it out).

So, I probably won’t take the risk of selling it for too much, too soon, and am still looking to wholesale it to another investor…

In other words, if I try to sell this property for more than $60K, I need to wait three months!

Given that FHA has just gotten rid of their 90-day rule, I have no desire to renovate and hold this property for 90 days before I can sell it (would rather keep my money moving). So, after I purchase it on Monday, I’m looking to turn around and sell it to another investor who is interested in a great rental property or flip project. Though keep in mind that the 90 day restriction applies to the house, so anyone who buys it from me will need to keep it at least until April before you can sell it too!

If you or someone you know is interested in buying it, let me know…

I’m looking to sell it for $60K (cash buyer or at least someone who can close quickly), and in my opinion, the property would make a great rental or a great flip at that price. While I haven’t even turned on the utilities (so do your own due diligence), I’m guessing it only needs about $2K in work to make it rent-ready or would need between $10-30K to make it a flip. I was planning to spend about $20K on renovations, but different people might have different ideas for what to do and not to do.

Of course, I’ll let you do your own due diligence on comps, but keep in mind that The Pine House is right around the corner (same neighborhood), and I’ll need to sell that for $135K to make my profit, so I’m betting on the fact that comps are at least $135K, and hopefully higher. In fact, The Poor House was under contract for $134,900 (and appraised for more than that), and is within a half mile of this house. Also, the house next door to The Pine House just sold in November for $145K. But again, do your own due diligence.

As for rental comps, I don’t really know (I don’t hold rentals), but I’m guessing it’s in the $950-1100 range. Thought that’s just a guess based on some For Rent signs I’ve seen in the area over the past year…

The best part is, if you buy this property, we’ll be neighbors…as I pointed out, we’re just getting ready to start rehabbing The Pine House right down the street…

Shoot me an email if you want more information or want to see it…

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.

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!