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.

For the most part, we’re out of houses to work on. Most of them are under contract waiting to sell or under contract waiting to be bought, and other than looking for more houses, doing some book-keeping, paying some bills (and taxes!), and working with buyers and sellers, there isn’t any rehab work to be done. That said, next week we should be back to work with plenty to do, so I’m just enjoying the down-time while I can.

With nothing terribly exciting to report, here’s my end-of-the-week wrap-up…

House #1: The Corn House

Our Lease Purchase tenants have been great so far. No issues, good feedback, and they’re apparently still very excited to buy the house.

On the down side, they asked us the other day if they could have a dog while they leased our place. My wife and I discussed it at length, and while we’d love to let them, and while we’re confident they’ll eventually purchase the house, we decided that it just wasn’t prudent for us to allow an unknown dog to live in that house. First, there are new hardwoods in the living room and dining room. Second, without a fence in the back yard, there is additional potential liability.

We hated to have to do it, but we let them know that we just couldn’t allow it. In the future, we’ll make a point of having this discussion before tenants move into our properties, just to avoid having to “be the bad-guy” by saying no later on.

House #3: The Second Chance House

This one is finally SOLD!

Though the buyers did call us today and ask if we would come over at some point and fix a couple very minor issues. While normally I would have had a very big problem with doing this, these buyers provided us a nice payday, and have been very accommodating to us in getting this house closed quickly; so, I agreed to stop by and fix the minor annoyances (specifically, removing a cable TV line that is attached to the side of the house and readjusting a shower door this is misaligned).

Hopefully, there won’t be any ongoing requests…but I’ll cross that bridge when I come to it…

House #5: The DIY House

We’re pretty much set for closing on this one. We found out that the appraisal came back at $128K, just $500 above the purchase price; it appears that the appraiser really did go out of his way to help us (and the buyer) out on this one.

The only remaining issue that needs to be addressed is that the VA inspector is requiring us to put a railing on the stairs leading to the basement and a splash-block beneath the gutter spout in the back yard. We’ll take care of that first thing next week, have the inspector verify, and then hopefully close on this sale late next week.

House #6: The Red Garage House

As mentioned yesterday, we received an offer on this one, and now have a binding contract. I’m still very curious how the FHA regulations will play out on this one…

First, I was under the impression that FHA wouldn’t fund the purchase until 90 days after my deed was recorded (which just happened this week); but the buyer’s lender says he only cares that it’s 90 days past the purchase date (which would be May 14).

Second, I’m still under the impression that FHA will refuse to start underwriting unless the purchase contract is actually signed after 90 days; so, from FHA’s perspective, the contract we currently have is probably not good enough to start loan underwriting. But again, we’ll let the lender sort this out. If he comes back and says we need a new contract, we’ll worry about it then. As long as the buyer acts in good faith, I don’t mind jumping through some hoops to make this one work.

House #7: The Roach Duplex

As mentioned the other day, the second contract on this house fell through.

Earlier in the week, we received a third offer — verbally — for a good bit less than the asking price. We rejected it flat-out, and the next day we received another verbal offer from the same guy for a few thousand dollars more. We also rejected that one, but countered with our minimum acceptable price. He’s taking that back to his partners, and if he decided to accept it, great. If not, that’s fine as well.

We also received a phone call last night from a woman who was supposedly planning to fax an offer over to us, but we never received it. It’s amazing how flaky buyers are…these days (after maybe a dozen promises of offers on various houses), I don’t even start to think about an offer until we have it in writing, signed by the buyer.

House #8: The 16-Bid House

We still don’t have a closing date for the purchase of this one, but the pre-closer assures us that they now have clean title and that we should close “by the end of the month.” It’s been nearly 7 weeks since the bank accepted our offer, so I’m ready to close and get moving on this one…as are my contractors.

House #9: The Hat Trick House

We close on the purchase of this one early next week (Monday), and don’t expect this to be a tough rehab. In fact, this house is pretty much identical to The 16-Bid House, and they’re both pretty much identical to The Red Garage House, so our contractors already know what to expect and will be able to cruise through both of these projects in just a few weeks.

The big question is whether or not we should be rushing through these projects, just to have the houses sit for a couple months waiting for the FHA clock to run down. Hopefully we’ll be able to find a local bank that can provide alternative loans to first-time buyers will similar terms to FHA, but without the 90-day seasoning period. This would allow us to sell these properties quickly, without all the FHA hassles.

Between schedules running over, losing marketing time due to the holidays, and having the first offer fall through after 2 months under contract, we’ve been holding this property for a long time — over 200 days. But, in the end, we received a full-price offer with few concessions or contingencies, and were able to close in about three weeks.

It’s been a while since we had a sales closing, and I have been looking forward to doing a final financial analysis on this deal. While I knew it would be profitable, I didn’t know to what degree.

Here is the run-down, with the final set of statistics at the bottom…

Timelines

As mentioned above, the total hold time on this property was much longer than expected. I was hoping for four months, and it’s been closer to seven. The rehab was scheduled to complete in about eight weeks, and took closer to twelve. We finished in mid-December, but let the property sit for a couple weeks until the holidays were past.

We got the first offer within a couple weeks, which tied up the property for two months until the buyers finally had to be cut loose. We put the house back on the market and got a full-price offer in less than 36 hours, and closed three weeks later.

Here are the key milestones from this project:

• Purchase Offer Date: 8/5/2008
• Purchase Closing Date: 9/19/2008
• Rehab Completion Date: 12/22/2008
• Sale Listing Date: 1/2/2009
• Sale Contract Date: 3/22/2009
• Sale Closing Date: 4/13/2009

We’ve learned a lot about rehab scheduling since this project completed, and hopefully will never make some of those same mistakes again…

Financials

This is the largest profit we’ve made on rehab to-date, so for that reason alone, I’m very happy with the financial results of this project. All told, our total profit after all fees, commissions, rehab costs and other expenses was over $35,000.

We had originally budgeted $36K for this rehab, and actually came in a few dollars under budget as of the time it was put on the market. With the two contracts we had on the property came some requests for additional work from the buyers, which we — for the most part — provided.

The additional work included getting a survey done, adding more insulation in the attic, putting a vapor barrier in the crawl space, building a handrail on the front steps, and some other minor fixes. The total costs of this additional work was about $2K, bring the total renovation budget to just about $38K.

Here is the breakdown of financials for this project:

While these numbers don’t reflect the final holding costs — the final utility bills have not been received — the final results should be within about $100 one way or the other.

Had the first contract we had on the house gone through, we likely would have seen a profit of about $23,000. Instead we made more than $35,000, so the two months we lost with the first buyers was actually a good turn of events from a financial perspective.

In terms of ROI, my total investment into this property (Purchase Costs, Rehab Costs, Holding Costs) was $20,238.16; this puts my ROI at just over 175%, and adjusted for the time this project took, my annualized ROI is over 310%.

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: 45 Days
• Rehab Time: 88 Days
• Selling Days on Market: 79 Days
• Selling Close Time: 22 Days
• Total Hold Time (Close to Close): 206 Days
• Total Profit: $35,447.67
• Return on Investment (ROI): 175.15%
• Annualized ROI: 310.34%

House #1: The Corn House

The Lease Purchase tenants at The Corn House moved in last week, and sent us a very nice email just the other day. They wanted to tell us how nice the house way, and how excited they were to be living there; they finished with, “We can’t wait until the house is ours!”

Not only did this make me feel good, but the fact that they’ve been in there for over a week without any issues is a good indication that my contractors did a good job on that house. There were many things that were never used before (brand new shower, new faucets, new toilets, new decks, etc), and I expected for the tenants to find at least one minor issue (and I told them to let me know if they do find anything, so I can fix it). Perhaps they’re just not telling us about it, but according to their email, everything is working fine.

We’re planning to check their progress on improving their credit in a few weeks (they’ve been using the credit repair company for two months now), and hopefully the news will be good.

The best news is that their first rent check cleared…

House #3: The Second Chance House

We’re hoping to close on the sale of The Second Chance House on Monday. So far, everything is going smoothly, and unless something crazy happens in the next couple days (it’s happened before), I think we may actually get to closing without any major issues.

More on this next week…

House #5: The DIY House

We still haven’t gotten any information on the appraisal for The DIY House. Apparently, with VA loans, the appraiser completely bypasses the mortgage broker and sends his report directly to the underwriter. This happened two days ago, and we’re hoping the broker gets the appraisal information in the next day or two, so we know if this closing is going to happen.

Other than the appraisal (which really shouldn’t have been an issue), I see no major obstacles to this one closing in the next week or two…

House #6: The Red Garage House

The Red Garage House is the current MAJOR FRUSTRATION for us right now. We finally got pictures on the MLS earlier this week, and within a couple days started getting calls. The very first buyer who walked through the house loved it, and wanted to put in an offer!

That’s the good news.

The bad news is that the buyer wants to use FHA financing, and we’re still subject to the FHA 90-Day Rule for this property (we purchased it on February 12). That would normally mean we should be able to close around May 14 (91 days after purchase).

The really bad news is that the clock starts ticking on the 90 days not when we purchased the house, but when the deed was recorded (as I mentioned in yesterday’s post). Unfortunately, the title company that closed this deal screwed up the deed recording, and IT STILL HASN’T BEEN RECORDED. Yup, that means the 90 days hasn’t yet started ticking, and there’s no way to close this deal with an FHA buyer before July, at the earliest.

Which means the buyer who really wants to put in an offer is out-of-luck as well…

House #7: The Roach Duplex

This one is under contract, and the buyer has until next Friday at midnight to perform his due diligence. We won’t know anything more until then — unless he backs out of the deal earlier…

House #8: The 16-Bid House

First, here are some BEFORE pictures of The 16-Bid House…

We still haven’t closed on this house. The title company is now telling us that they think they should have clear title in the next week or two, and are confident that we’ll close before the end of the month.

This one is really frustrating, because we have little else to do these days, and our contractors are all on-hold waiting for this property to close. Hopefully they won’t find any other long-term jobs in the meantime.

House #9: The Hat Trick House

First, here are some BEFORE pictures of The Hat Trick House…

This one is scheduled to close on April 20, which means it will likely close before The 16-Bid House, despite us getting it under contract a month later. Hopefully they’re planning to use a better title attorney.

So there you have it — we have 7 houses that we’re “working on” and we essentially have nothing to do. We’re putting together Scope of Work and Materials List documents for The 16-Bid House and The Hat Trick House, but those are pretty much exactly the same as The Red Garage House, so the work is essentially done.

We’re also looking for more houses to buy, and currently have three offers pending, of which we hope to get one accepted.

As I mentioned in that post, we still needed a double window replaced, and still needed the staging complete. Well, yesterday the window got replaced. And today the staging got completed…

We were hesitant to take the furniture out of The Second Chance House to use in this house, but after spending some time speaking with the The Second Chance House buyers, talking to their mortgage broker (our guy) and finalizing the property survey for the property (the buyers want to build a garage on the property, and wanted to make sure they had the room), we’re confident that the closing should go smoothly and that THIS TIME we wouldn’t have to put it back on the market.

So, we moved all the furniture today, and got the house completely ready for buyer showings…

Unfortunately, it was getting dark by the time we finished, so I’ll have to wait until tomorrow to take final staging pictures and get them posted…

Sorry for the boring post, but after moving furniture in the rain all day, I’m exhausted!

House #1: The Corn House

As mentioned previously, The Corn House is under a Lease Purchase contract for the next 5 months, and hopefully we’ll be able to sell it by August. We met with the buyers a few hours ago to collect the security deposit ($1500) and their first month’s rent ($1000), so at this point we’ve locked in at least $3000 on the property. Additionally, the “buyers” will be paying $1500 per month through August, with $500 applied towards their down-payment and closing escrow and $1000 coming directly to us as rent.

I’m curious as to how this will play out; the “buyers” seem like a great family, and I know they really want to be able to buy the house; hopefully they can get their credit in order in the next couple months, and everyone will be happy come August…

House #3: The Second Chance House

Tonight is the expiration of due diligence on The Second Chance House, which means that if the buyers back out of this deal after today, we at very least get to keep the $1000 deposit. (Wow, I must really be starting to become cynical when I’m expecting buyers to back out and just get their earnest money!)

The buyers have asked for about $2000 in additional closing items (a property survey and a few repairs), which given their request for very little in seller-paid closing costs is completely reasonable. I generally expect to pay $4000 in closing costs for the buyer, and they only asked for $2000; so the $2000 in “extras” really isn’t that big of a deal.

Anyway, I’m ready for this property to close. With the long rehab that ended over the holidays and the first offer that fell through, our hold time on this property is nearly 7 months, and I hate holding properties that long. While I love this house, it’s time for it to get a new owner…

House #5: The DIY House

I’m still amazed that we got the buyer to sign the contract on this one!

Not only that, but she drove an hour in the rain this morning to deliver the earnest month check to the broker, and she is telling everyone that she wants to close as quickly as possible. Her lender says there’s a new VA loan process that allows buyers to get loan approval within 10 days; I don’t know if it will happen or not, but it’s possible we could close on this one in less than two weeks.

While I’m always happy to sell a house, I’m going to miss this one. It’s my favorite rehab so far (I’d live there in a heartbeat), and we are constantly getting phone calls asking about it. It doesn’t surprise me that our total hold time will likely be well under three months; my question now is whether we let it go for too little?!?

House #6: The Red Garage House

The Red Garage House is about ready to be put on the market. We had our cleaning woman come in today for the final clean, and we finished up a bunch of the final rehab items (paint touch-up, smoke detectors, shelving, etc).

We’ve decided not to stage the property right away, for two reasons:

1. We don’t have any extra furniture to use right now. With furniture at The Second Chance House and The DIY House not ready to be moved, we’re out of staging furniture. And we don’t want to buy new stuff, as both those other sets of furniture should become available in a few weeks;
2. This house will likely sell to an FHA buyer, meaning they’ll have to wait until 90 days after we purchased it to close — which is May 14. Given that, we’re in no hurry to get it under contract, so there’s no hurry to get it fully staged.

We’ll likely finish it up and list it this weekend at a little bit higher price than we had planned, since we have a couple extra weeks before we really plan to sell it. If we get an offer at the higher price, great; if not, we’ll drop the price in a week or two as we approach the 90-day mark.

House #7: The Roach Duplex

No update on The Roach Duplex. We’re still getting a few calls per week, but no serious offers. I’m in no hurry to sell this (I’ll keep it for the next 5 years, if necessary), and unless my wife tells me about the phone calls, I generally forget we even own it.

House #8: The 16-Bid House

We were supposed to close on this one today, but the closing attorneys still haven’t come back with clear title. I have no idea when it will happen, but hopefully sometime next week.

Now that The Corn House, The Second Chance House, and The DIY House are under contract, and now that The Red Garage House is practically on the market, we’re out of houses to work on!

I guess it’s time to start buying again…

It’s a very decent offer — about 95% of asking price, with us providing 3% in seller-paid closing costs and some of the staging furniture thrown in. The best part is that there is no due diligence period, so we don’t have to worry about her getting cold feet again, or coming back to ask for more concessions. At this point, if she decides to back out for any reason, we can keep her earnest money deposit. And because she chose not to use our lender, we insisted that her deposit was 1.5% of the purchase price (nearly $2000). Hopefully, that’s enough incentive to get her to see this through to closing.

All-in-all, she’s getting a great house at a fantastic price (about 10-15% below market from our analysis), so I don’t expect her to have any regrets once she moves in. Closing is scheduled for late-April, and if her lender can push through the VA loan faster than that, I’ll push for an even earlier closing.

House #3 Update:

In other good news, we got a call today from the previous Second Chance House buyers — the ones who lied to us about their credit and ultimately terminated their contract. They called my wife today to tell her that they finally were cleared for their loan, could close in three days, and wanted to know if the house was still available!

After having them send us an obnoxious email last week telling us that they wouldn’t put up any additional earnest money because “the house will still be on the market whenever we’re ready to close,” my wife took great satisfaction in letting them know that the house was already under contract again, for full price.

Almost makes me want to believe in karma…

On Monday (12 hours after they signed the contract), they had an inspector come out complete a property inspection. They noted two issues that they wanted repaired (missing vapor barrier in the crawl space and an improperly vented bathroom fan), and we plan to take care of that this week. In addition, we’re arranging a survey to be done this week for them (they want to build a garage), they’ve already scheduled their moving company, and they have banks fighting over them to be their lender. They’ve agreed to use our lender, and he’s already given us the good news that their credit is great, they have the down-payment money, and everything is on-schedule for a late-April closing.

While they still have a couple days left in their due diligence period, and then we have to get the final appraisal completed, I don’t foresee any major roadblocks at this point…

Hopefully this one will move forward with a good bit less drama than the last time this one was under contract…

On Friday, when it was clear that this deal was likely not going to close, my wife scrambled to get the house back in to showing shape — she rehung the pictures, did some cleaning, and moved back some of the light furniture that we had taken out of it. We took Saturday off, and then today I held an open house, hoping to get some more potential buyers through there.

Long story short, a couple from Nashville who are moving down here were house-hunting for the weekend were very interested in the house, and wanted to put in an offer. I called my wife (who was in the city) and she came back to meet with the couple before they headed home. The couple put in a full-price offer, and promised to call our lender tomorrow to get qualified for a loan (they had a pre-approval letter from their bank, but we’re not taking that chance again).

Assuming nothing comes up during due diligence (they’re using the same inspector who did the previous inspection on that house), assuming they get approved for a loan, and assuming the house appraises for full price (the last appraisals were above full-price), we will hopefully close on this one in late April. I’m not getting my hopes up until we’re a little further along in the process, but it’s reassuring to know that people really love our house.

What a difference a day makes…

We sent the final extension amendment over last night (the one that said they must put the rest of the down-payment into escrow and pay $100 per day penalty until close). The only response we received was that the agent would be back in contact with us today.

Then, this morning, my wife got a call from the closing attorney saying that they spoke with the mortgage broker and that the deal was scheduled to close next Monday or Tuesday. But, as I mentioned, the buyers told us yesterday that they were told their credit wouldn’t be repaired until at least mid-April! It was clear that the mortgage broker was again trying to stall by convincing us everything was on track, when the buyers already admitted it wasn’t. This infuriated my wife, who called her broker to find out what our legal options were.

Her broker suggested that we speak with the banking commission and report the broker’s bad behavior. Additionally, they suggested that we had two courses of legal action: I could sue for Breach of Contract (to recover lost expenses and damages), and she could sue to recover her lost commission (as could the buyer’s agent if he wanted to). After speaking to an attorney, we decided that recovering Carol’s lost commission would be easier than winning anything from a Breach of Contract suit; so, while it may cost some money to take this to court, we could likely get about $4000 from the buyer’s, effectively keeping them from buying another houses and screwing over another seller.

We let the buyer’s agent know that if the buyers didn’t agree to our extension terms, we would no longer negotiate, we would not accept a new contract from these sellers in the future, we would walk with their $500 deposit, and we would do our best to recover my wife’s lost commission on the deal. Additionally, I will put in a call to the Department of Transportation to let them know that the money they provided the buyers specifically to close on this deal was not going to be used for that purpose; if they want to pursue getting that money back, that’s up to them. And lastly, we will figure out what our options are with respect to having the mortgage broker penalized or punished for his clearly unethical (and perhaps illegal) role in this whole fiasco.

I don’t expect to hear from the buyers or their agent prior to the contract expiring tonight, and The Second Chance House is now back on the market for the weekend…