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.

It’s been both fun and educational going through my first complete cycle of flipping of a house, and I can honestly say that I’ve learned more in the past several months than I ever expected I could.

Now that The Bulge House is officially sold, it’s time to do a final review of the project to determine where we succeeded, where we failed, and ultimately how much money we made (or lost). Here is the run-down, with the final set of statistics at the bottom…

Timelines

Because I had originally planned to rent this house, my first stab at a schedule and budget really weren’t representative of the work we ended up doing, so it’s difficult to tell if this project was a success from a schedule standpoint. That said, the total time from purchase offer to closing was only three weeks, the total time from purchase to listing for sale was under a month, the house was put under contract in less than 8 hours, and the total time from contract to sale closing was just over a month; I’m tremendously happy with all those numbers.

Here are the key milestones from this project:

• Purchase Offer Date: 8/1/2008
• Purchase Closing Date: 8/21/2008
• Rehab Completion Date: 9/15/2008
• Sale Listing Date: 9/15/2008
• Sale Contract Date: 9/15/2008
• Sale Closing Date: 10/20/2008

Most amazing is that the total time from the closing of the purchase to the closing of the sale is less than 60 days. I may never accomplish this on a full rehab again…

Financials

Again, because I had originally planned to rent this house, I didn’t have a set budget for the rehab we ultimately did. So, while I can’t claim that I was either under- or over-budget on this one, I’ll let the final financial results speak for themselves.

Here is the breakdown of financials for this project:

While these numbers don’t reflect the final holding costs (last utility bills have not been received), nor do they reflect the refunds for things like insurance over-payment and escrowed funds, the final results should be within about $50 one way or the other.

Considering my overarching goal for each of my flips is to profit at least $15,000, I’m quite happy with my $23,668.86 profit. Especially considering this was earned for under four weeks of rehab effort! In terms of ROI, my total investment into this property (Purchase Costs, Rehab Costs, Holding Costs) was $28,247.03; this puts my ROI at just over 83%, and adjusted for the time this project took, my annualized ROI is nearly 510%.

Final Statistics

Here are just some of the final statistics that I’ll be tracking for all my projects, and that summarize the success/failure of each project pretty well:

• From Offer to Purchase Time: 21 Days
• Rehab Time: 25 Days
• Selling Days on Market: 0 Days
• Selling Close Time: 35 Days
• Total Hold Time (Close to Close): 60 Days
• Total Profit: $23,668.86
• Return on Investment (ROI): 83.76%
• Annualized ROI: 509.52%

House #1: The Corn House

We’re about a week behind schedule on this project (my very first project), but we’re getting down to the wire. Yesterday, we started staging the interior, and today we’ll be finishing staging and our real estate agent will be stopping by to take a look and give us an idea of how much we’ll likely list the property for. She has already warned us that in this neighborhood it could take 120 days or more to sell, so we’re not getting our hopes up for a quick sale. That said, this is a great house that turned out better than I expected. The travertine and tile kitchen, the tiled bathrooms and shower, the hardwoods, and all the new appliances, fixtures and hardware will make this a fantastic home for someone, especially in its price-range.

Unfortunately, the exterior of the house is not quite as far along as the interior. We likely have about 4-5 more days of work on the exterior (landscaping, painting, trim, front porch, etc), and I’m hoping that by the time I get back from vacation on Monday, the exterior will be completed, and the house will be ready to list. My brother will be managing things while I’m gone, so we’ll see if he is better at getting this project completed than I have been.

I’ve always said that I’d be happy just breaking on this first house (I jumped in too quickly and didn’t get a great deal), but now that I see the finished product, thoughts of actually making a profit are running through my mind. I guess setting my expectations low from the beginning was a good thing; any profit on this project is going to feel like a big payday.

Hopefully I’ll be able to post some AFTER interior pictures tomorrow, once staging is complete.

House #2: The Bulge House

We are officially out of the due diligence period on the selling of this one, the appraisal came back above the purchase price, and everything seems to be moving towards closing. Unless something unforeseen happens, it’s fairly likely we’ll close on this one in the next couple weeks. The nice surprise with selling The Bulge House is that, while we thought we’d need to wait three months to sell it from the time we purchased it (due to FHA rules on reselling too quickly), it still looks like we’ll be able to close prior to that three-month mark.

As I’m pretty confident we’ll get this deal closed fairly soon, we moved all the staging furniture out of The Bulge House yesterday, and into The Corn House. While I thought we might have to get another set of furniture, the quick sale on this property and the slip in schedule on that one worked out perfectly, and we’re able to use the same furniture.

House #3: The Second Chance House

Things are moving along with The Second Chance House. All the demo is complete, the new doors and windows are in, and framing, electrical, and HVAC are scheduled for this week. We did run into one unforeseen issue — there was some termite damage in the Bonus Room sub-floor, so we decided to rip out the entire sub-floor on that part of the house, and start from scratch. This will cost an extra $300, but we also found out that our cabinets and countertops will come in around $900 less than expected (including installation), so we’re still ahead in terms of budget for this project.

Tearing out the sub-floor in a couple rooms also necessitated having to remove any extra wall. This also works out well, as it lets us redesign the layout of the two back rooms (the Bonus Room and the Laundry Room) to optimize space and create a more optimal layout. I know the budget impact isn’t too bad; I just hope there is little or no schedule impact due to this added work.

Before the end of the due diligence period, the buyer came back with a short list of demands:

1. Buyer is provided with all original receipts and warranties on the new appliances, the roof, the water heater, the A/C unit and the furnace;
2. Buyer to have walk-through of the property within 48 hours of the closing;
3. Seller to provide Termite Letter to to the Buyer (basically, a letter from a termite company indicating a clean termite inspection);
4. Seller to provide 1-Year Home Warranty on the property (this can be purchased through a third-party company);
5. Seller to have the septic system cleaned, serviced, and inspected.

These are all very reasonable requests, and I had already factored the price of providing these into my cost calculations, so from a financial standpoint, I’m very happy with how this transaction is proceeding. This week I’ll be taking care of these items, and hopefully we’ll have a closing date arranged by next week.

House #1: The Corn House

The Corn House is coming along nicely, after 5 weeks of rehab work. While technically the rehab was scheduled to finish this past Friday, I had pulled the contractors off for about a week to do some work on The Bulge House, so it’s only fair to add another week to the official schedule. I’m hopeful that this one will be substantially finished by the end of this week, but have a feeling there will still be some minor details to attend to in the coming week or two.

All the kitchen and bath tiling is completed (including a nicely tiled shower), the cabinets are refinished, the walls are painted, we have new vanities in the bathrooms, new toilets, new lights and fans, and new hardware (faucets, switches, outlets, etc) throughout the house. Also, the deck is 90% complete, much of the basement work has been completed, and the carpet is going down today. That leaves the appliances (tomorrow), the hardwood flooring (Wednesday, I believe), and then a whole bunch of detail work later in the week.

My biggest concern about this house right now is the exterior. While my GC did a lot of demo in the backyard, and a bunch of generic landscaping (mowing, trimming, etc) a couple weeks ago at the beginning of the project, the exterior is once again starting to look overgrown. Additionally, the “corn stalks” that were cut down in the back yard have already grown back nearly 3 feet in three weeks! I’m thinking I may have to spend some extra money to bring in a professional landscaper and get this done right, once and for all. Not to take anything away from my GC, but this is a big job, and likely requires someone with some good landscaping experience.

Hopefully I’ll have some more pictures to post later this week detailing the progress being made…

House #2: The Bulge House

The Bulge House is still under contract, and we have about 6 more days left in the buyer’s due diligence period. Other than some requests to keep some of the window treatments from our staging (which we granted) and an offer to buy some of our staging furniture for about half of what we bought it for (which we made a counter-offer on), we haven’t heard much from the buyer. I believe that they had their inspection over the weekend, as I noticed a lot of things moved around and a lot of dirt on the floor. I also noticed that the door to the attic had been forced open (it apparently had been painted shut when we painted), which leads me to believe there was an inspector up there.

I guess we’ll hear more this week from the buyer once they get their inspection results back; while I don’t believe there are any major issues, I fully expect the buyer to try to negotiate whatever she can doing her due diligence period, and getting inspection results presents a perfect negotiating opportunity for her. As for the request for the staging furniture, we counter-offered at a price that was still considerably less than we paid for it, but only offered the deal if the buyer agreed to not ask for any additional concessions. The buyer wasn’t ready to do that just yet, so the issue of selling some of the staging furniture is still open.

Lastly, the buyer’s lender is still quite convinced that they can get around the FHA 90-Day Rule, and close on this one by October 15. I’m very skeptical, and while I’d be thrilled to close that quickly, I’m fully expecting this one to not close until November 24 at the earliest. If anyone knows any loopholes in that FHA rule, let me know; I haven’t been able to find one yet.

House #3: The Second Chance House

The Second Chance House closed on Friday, and I’m hopeful that we’ll be able to start construction today. I’ve been trying to keep my GC engaged on this one, just waiting for the close, but since it took so long (and closed spur of the moment), I’m not positive he can get his crew together on short-notice and be ready by today. We’re meeting early this morning to finalize the details of the contract, sign the papers, and potentially hand over a first check, and I’m hoping his guys will be ready to start demo by the time we’re finished.

This house will be getting a major interior remodel, with a number of walls being torn out, and the entire family area of the house (living room, dining room, kitchen) being opened up into one big area. Demo will likely take 3-4 days (including a bunch of exterior demo), and I’m expecting some major transformations to take place quickly with this one. I’m excited about this project, and really think this could be an awesome house by the time we’re finished. It better be — there is a lot of sales competition in this neighborhood, and while this house has a lot of curb appeal, it’s going to take a great remodel to make it really stand out from the crowd.

Hopefully I’ll have a lot more pictures later in the week…

While it’s not a full-price offer, there are a lot of upsides to it:

• It’s only about $8K below full-price (with seller paying $2K in closing costs), well within my “acceptable range”;
• The buyer walked through with her father, who is a contractor, and had no issues with the house;
• While the buyer has a 10-day due diligence period, my agent believes that she may not even get an inspection;
• My agent believes that the buyer will be unlikely to ask for any further concessions;
• We believe the buyer’s loan has already gone through underwriting, meaning it’s unlikely that getting a loan will be an issue;
• The buyer put down a reasonably large amount of earnest money, given the price of the house (more than 1%);
• The buyer would love to close in 30 days, much less than most buyers these days.

All-in-all, a good set of circumstances, and I accepted the offer as-is.

The one tricky part of this deal is that the buyer is likely using an FHA loan (a loan secured by the government for first-time home-buyers). While this is good in that FHA loans are the easiest to qualify for these days, they have the downside of having very stringent requirements on the property. First, there will be an FHA appraisal done, which may be tougher than a typical appraisal done for traditional Fannie Mae/Freddie Mac loans; this actually isn’t too much of an issue, as I’m confident the house will appraise for the selling price.

Second, and more importantly, FHA loans have a rule whereby a buyer can’t buy a property using an FHA loan if the property was last purchased within 90 days. In other words, because I didn’t close on the property until August 21, another buyer can’t close on the property using an FHA loan until at least November 21. While the buyer can still put the house under contract, it will be another 8-9 weeks before I can close this deal, despite the fact that the buyer will be ready to close sooner (her loan will not be).

The buyer has given some indication that she thinks her lender won’t be restricted by that 90-Day Rule, so perhaps it isn’t really an FHA loan after-all, and perhaps we can really get this deal done in the next month. Not getting my hopes up, but that would be a nice little bonus…

Speaking of not getting my hopes up, a lot can happen between now and closing. First, the house has to go through an appraisal and be appraised for at least what it’s being sold for (I wouldn’t think that’s a problem, but these days, who knows). Second, the buyer has a 10-day due diligence period, during which time she can back out for any reason and get her deposit back. And, after that due diligence period, there is nothing forcing the buyer to actually close; of course, after the due diligence period is over, the buyer forfeits her deposit if she doesn’t close on the property.

So, this is far from a done deal, and until the ink is dry on the closing papers, I’m trying not to get too excited. That said, I think the buyer is getting a very good deal on a very nice house, and I hope for both our sakes, we can get this deal done.

Now, had I actually done all the work I was planning to do prior to putting this one on the market, I likely would have spent almost that much. But given the last minute change of plans (trying to sell instead of rent), we decided not to do as much updating of the kitchens and bathrooms as we had originally planned.

All that said, here are the final purchase and rehab costs spent on The Bulge House:

My total purchase plus rehab costs on this project are just under $82K, and based on the outcome of the property, I’m quite pleased. I don’t think I’ll be able to sell this one quickly, so I’m expecting to have to pay holding costs on this property for at least a couple months (if I sell to an FHA buyer, I’ll need to put off closing for another 8 weeks — more on that in a later post). Given my $530/month mortgage and escrow payment, and another $150-200 per month in utilities, that’s another $3000 in holding costs. So, assuming I sell this one around the end of the year, my all-in cost will be on the order of $85K.

I’ll go into more detail on my likely profit in another post, but all-in-all, I should make some money on this one…it’s in my agent’s hands now…

Btw, it’s also worth noting that the total rehab time from closing to relisting was only three and a half weeks, so I’m quite pleased with that as well!

Here are some almost final staging pictures; as of later today, the living room will be getting a TV and there will be fresh flowers throughout the house. Plus, we have a professional stager coming in this afternoon to give us some pointers are how we can improve the layout and design.

It’s quite amazing how well this project came together. In about two-and-a-half weeks, this went from a run-down foreclosure into a house that I’d be willing to live in; it took a lot of contractors, some long days, and more personal elbow-grease than I planned to put in, but in the end, I’m very happy with the results. As I mentioned previously, this rehab was a bit non-standard, as we hadn’t originally planned to try to resell it so quickly. That being the case, we didn’t do as much as we would have liked; had we planned to resell from the beginning, we would have done some additional bathroom and kitchen remodeling. But live and learn…

For those who are interested, I’ll post some rehab financial tallies in the next day or two…

Once I decided to turn around and sell it, I created a list of all the additional work items that needed to be completed:

- Lay new vinyl flooring in the kitchen
- Repaint the kitchen (the original paint color we choose was too white)
- Trim some tree branches over the driveway and house
- Put down some “crush ‘n run” (gravel) between the driveway and carport to allow additional parking
- Fix some minor, but ongoing, plumbing issues
- Stage the house

As I wanted to get the house on the market as quickly as possible, I’ve spent the week dealing with lots of contractors trying to get these things done. From multiple plumbers, to multiple landscaping quotes (for the gravel) to finding a good handyman to put down the new kitchen floor, to getting my painter back for an afternoon to repaint the kitchen, it’s been a busy week.

On top of it, my wife has spent the entire week picking out furniture to stage the house. Because we’ll be using the same furniture for multiple houses, it’s important that the stuff she chooses is versatile and coordinated, but also reasonably priced. All told, it looks like we’ll be able to get a house full of staging furniture for about $4000.

The rest of the weekend will be spent taking care of all the remaining minor details (re-cleaning, paint touch-up, final landscaping, final staging, etc). And if all goes as planned, the house will go on the market on Monday.

Here are the almost after pics…

And here are the before pics, to refresh your memory…

There are still a number of little things (like landscaping cleanup, etc) that still need to be done, but these should give a decent idea of the cosmetic changes we made. And here is a before & after picture of the front of the house:

Now, for what has happened in the past 48 hours:

• After seeing how nice this house turned out, and given the other competition in the neighborhood, we’ve decided to put this house up for sale without renting it (more on that below). We spoke with our real estate agent, and while she said that this neighborhood didn’t have much transaction volume (in other words, we could expect it to take several months to sell), the comps indicate that we could potentially get more than we had previously had thought, and it’s worth the risk of not being able to sell it to potentially make a quick profit. We hope to list the house at the end of the week, though there are still some issues (more on that below, as well).
• My “tenant” for this house and I have come to an agreement that he will not rent this house, as he and his girlfriend would rather settle down somewhere and not have to be displaced again in a month or three if/when this house sells. So, they will be renting an apartment for a couple months, and we will scout out a house that we will decide to rent to them and not put it on the market until they are ready to move. It will still require them to move in a couple months (only if they want to), but at least after the next move, they’ll have a semi-permanent place. And who knows, they may find something they want to buy in the meantime, and make their next move a long-term one.
• Given that we’re going to list this place for sale without renters, we decided to increase the Scope of Work just a bit to make the property a bit more attractive to buyers. For example, there is a carport, but only grass leading from the driveway to it; we are going to put down gravel to allow cars to easily utilize that second parking spot. Additionally, we’re replacing the ugly 20-year-old vinyl floor in the kitchen, and doing some additional landscaping. Lastly, my wife is very unhappy with the “white” paint color I picked for the kitchen and baths (she says it makes the cabinets look worn), so we’ll throw yet another layer of paint in the kitchen. (I’ve spent over $1000 in paint this month!!!)
• We’ve also run into a couple snags in the rehab that are putting our budget and schedule at risk. There is a plumbing problem from the laundry room that has caused great frustration; at this point, we’re just going to call in a plumber to reroute the line where we think there is a major blockage (even the industrial snake couldn’t get through it). There were also several minor plumbing issues that required some new plumbing under the kitchen sink and a toilet to be replaced. And when we pulled up the old vinyl floor in the kitchen, we found a bunch of mildew and a thin moisture barrier that was glued to the plywood sub-floor; instead of wasting time tackling this ourselves, we’re going to get a flooring guy in this week to finish that job.

Once I get all the details wrapped up (hopefully by Wednesday), and get my agent and house-stager in their to do their thing, I’ll post an update on budget and final rehab numbers. Because I didn’t have an original budget for selling the house (just a high-level estimate), it’s impossible to say whether I was on-budget on this one or not; but given the budget for renting the house, we are only about $1-2K over that, so I’m very, very happy with our ability to stay on budget on this one. As for schedule, the goal was to get it in rental shape by the end of this past weekend, and other than the lingering plumbing issue — which would mean no use of the washing machine — everything was ready for my tenants.

So, here is my final “punch list” for getting this thing in sale shape this week:

- Fix the plumbing issue
- Replace the kitchen floor
- New paint in kitchen
- Additional landscaping
- Gravel along the driveway/carport