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.

Timelines

Despite the fact that it took over six months to get the purchase of this property closed, the rehab and resale of the property went extremely quickly and smoothly. In fact, between purchase closing and sales closing, only 15 days elapsed. We spent about a week doing minor rehab (would have been faster if we didn’t have bad weather), spent about 3 days marketing it, and then closed within 5 days of having a signed contract.

Here are the key timeline milestones:

• Purchase Offer Date: 3/2/2009
• Purchase Closing Date: 9/3/2009
• Rehab Completion Date:9/10/2009
• Sale Listing Date: 9/11/2009
• Sale Contract Date: 9/13/2009
• Sale Closing Date: 9/18/2009

Financials

We bought the property for $39,000. We spent about $4450 in rehab costs (painting and repairing siding and drywall). We sold the property for $55,000. Pretty typical for what I refer to as a “prehab” deal (basically doing just enough rehab to get a lot of investors interested).

Here is the breakdown of financials for this project:

In terms of our profit, I’m pretty happy with the $8600, especially given the little work we had to put into the renovations and marketing. As someone commented on in a previous post, we could have made more money had we fully rehabbed it ourselves and then resold to an owner occupant.

Had we done one of our full rehabs, our rehab costs would have been closer to $15K, and we likely would have made between $20-25K in profit, depending on how aggressively we priced it. It only would have been an extra 2 weeks worth of rehab effort for our contractors, but we wouldn’t have been able to sell it to an FHA buyer (most of the buyers around here) until mid-December; and with the holidays, we realistically wouldn’t have it sold and off the books until February.

In terms of ROI, my total investment into this property was right around $44K (we paid cash). This puts our ROI at only about 20%, but if you adjust it for the fact that we only owned the property for two weeks, our annualized ROI is right about 480%. I’m certainly happy with that…

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: 185 Days
• Rehab Time: 6 Days
• Selling Days on Market: 2 Days
• Selling Close Time: 5 Days
• Total Hold Time (Close to Close): 15 Days
• Total Profit: $8666.67
• Return on Investment (ROI): 19.73%
• Annualized ROI: 479.99%

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

House #1: The Corn House

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

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

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

House #6: The Red Garage House

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

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

House #8: The 16-Bid House

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

House #11: The Sunglasses House

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

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

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

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

House #12: The Mini House

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

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

House #13: The Poor House

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

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

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

Mobile Home #1

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

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

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

So as not to extend this deal too long (baby is coming any day now), we decided to try to negotiate the best offer to where we wanted it, and get the paperwork signed as quickly as possible.

The offer we liked best was about $1K below asking, with $900 back in closing costs. It was a cash offer, with a 7-day inspection period and closing on September 25. We countered at full-price (with $900 back in closing costs), a 2-day inspection period, and closing this Friday (September 18). The buyers quickly accepted our counter-offer, and we got the signed contracts back this morning. They have until Tuesday night to do their inspections and back out of the deal; otherwise, we’ll hopefully head to closing by the end of this week.

Assuming the deal goes through at these numbers, we’ll make about $8K in profit. While that sounds like a great deal for a property we’ll have only held for 2 weeks, we’ve had earnest money tied up in this one since March, had to deal with vandalism before closing, and then did a decent amount of rehab prior to reselling it.

So, while I’m certainly not complaining, this deal has been a pain in the butt for 6 months now, so the $8K profit can’t really be considered “free money”…

Here are the pictures of our partial rehab…

Given the rehab we’ve already done — siding repair, drywall repair, new front door, and paint inside-and-out — all an investor has to do to bring this house up to rent-ready or retail shape is to replace all the lighting and plumbing fixtures, replace some carpet, and throw in a new air conditioning compressor. I have a feeling whoever buys this will see good cash-flow or a nice retail profit.

We’ve listed the house on the MLS, put ads on Craigslist, and I have sent an email to my buyer’s list of investors. Over the weekend, we had several people look at it, we’ve already received one full-price offer, and are hoping for another offer or two in the next couple days. The offer we received has a financing contingency, and I don’t feel like dragging this deal out for another three weeks just to find out that the guy can’t get a loan; so we’ll likely counter-offer and if they’re not willing to drop the contingency, we’ll likely pass on the offer.

As for why we aren’t flipping it ourselves, it boils down to the fact that we don’t want to hold this property for another 90 days just to get a retail buyer; and with FHA regulations, that would likely be necessary. With the baby due any day now, I want to get rid of as much inventory as possible right now, and start over again in a few weeks when things settle down.

Rehab will likely start on Saturday, and will hopefully be completed by Monday. We’ll start looking for investor buyers next week, and hopefully we’ll be able to sell it relatively quickly…

It’s been a long day, so I’m going to keep this short, and head to bed…

After literally 6 months (185 days) of having this house under contract, the bank finally has clear title, the closing attorney finally has all the paperwork, and the closing is scheduled for Thursday afternoon. Of course, I’ll believe it when I actually get to the closing table, but at least there appears to be some hope that we’ll own this property pretty soon.

I mentioned in a previous post that the property had been broken into recently — most likely by some teenage kids — and that we had asked the seller for some compensation for the damage. They agreed to give us $2K off the purchase price (exactly what we asked for), and they gave us permission to put one of our portable alarm systems into the house to notify us if there were any more break-ins. Between the alarm system and the warning signs we posted around the exterior of the house, we’re not expecting any further problems or damage.

Also, while we didn’t ask the seller for permission to do it, we had our window contractors come in and replace the broken window in the living room, where the kids (and the rain) were likely entering the property. It cost us $215 that we’ll lose if we don’t end up closing on the purchase of the property, but it’s a chance we’re willing to take.

Our painters must be feeling generous, as they have agreed to repair all the interior drywall damage (A LOT!) and all the exterior siding and wood damage and then paint the interior and exterior, all for about $3700. Along with replacing that living room window (already complete) and replacing the hideous front door, our total rehab costs on this property should be around $4100, and should only take about two days.

Once that work is completed, we’ll most likely turn around and quickly resell it to another investor. Even with just this small amount of work, the house will be about 50% rehabbed (it’s a pretty small project overall), and will only need new carpet, lighting fixtures, plumbing fixtures and some other minor renovations to make it a great rental or flip for whoever buys it from us.

While we could likely make $20-30K finishing the renovations and flipping the house ourselves, it would most likely take us at least 90 days (most buyers in this price range are FHA), and we don’t want to hold the property for that long. Instead, we’re happy to make $5-10K quickly, and just be done with this house once and for all.

I’ll post some pictures later this week or early next week after our renovations are complete…

That’s the good news…

The bad news is that we went back to the property today to see what condition it was in (a lot can happen in 5 months), and unfortunately we found that it had undergone some “changes.” Specifically, it appeared that some young adults were using it as their personal hang-out spot — magazines, cigarette butts, soda bottles, etc, were strewn around the house. Additionally, one of the windows had been knocked out, presumably to allow them to gain easy entry, and there was some major drywall damage done throughout the house, with whole walls knocked out. Lastly, the air conditioning compressor was stolen from the backyard.

We’re going to ask the seller to compensate us for some of this damage, as they clearly didn’t do much to make sure the house was secured. I don’t know if they’ll agree or not, but I can’t imagine they want the house back on the market in this condition, and with these problems.

Our current plan for this house is to spend a couple thousand dollars doing some basic cleanup — drywall repair, window replacement, interior paint, etc — and then try to resell it to another investor looking for a renovation project or a rental. By the time we’re done with it, all it should need is new carpet, light fixtures, plumbing fixtures and a new air conditioning unit, which should be pretty easy even for the most inexperienced investor. Not only will the next investor be getting a great deal, but we’ll be able to keep our contractors busy until we close on The Skyline House in a couple weeks.

Hopefully we’ll have more info on this one in the next couple days…

Last week, my wife sent the agent an email mentioning that the contract was about to expire AGAIN, and that we needed an extension. Of course, we heard nothing (horrible agent). Then, at 10:00am this morning, my wife gets an email that says, “Attached is the extension…please fax it back to me by noon or the contract will be canceled.”

Of course, my wife called and bitched out the agent, as it’s not our responsibility to rush around after they’ve taken 5 months to deal with these issues. My wife also mentioned to the agent that my project manager had stopped by the house last week to check on it, and it appeared that some kids decided to have a party in there on the 4th of July. My wife told the agent that if they didn’t want to give us more time to get the extension back, good luck trying to sell the place.

The agent called back a few minutes later and told us we could take til the end of the day. In the end, it’s still a great deal for us, so we signed the extension and faxed it back. This one is through August 21…though I’m not holding my breath that we’ll actually close by then.

I’m in no hurry, it will still be a great deal whenever we close on it…

House #1: The Corn House

We’ve collected four on-time rent checks, and according to the contract, we should be closing on the lease-option on this one at the end of next month. Unfortunately, based on the credit check that the mortgage broker ran last month, it’s unlikely the buyers will be in a position to qualify for a loan by the end of August.

We haven’t talked to them about it yet, but my guess is that they’ll want to extend the option, and given how much we’re making in rent and option fees on this property, we’ll be inclined to extend the contract for them. I expect we’ll probably extend the contract through the end of the year, and hopefully by then they’ll be in a position to get funding and purchase the house outright.

House #6: The Red Garage House

The Red Garage House is still on the market, and we’re actually hoping we don’t get an offer before the end of next week. The Hat Trick House is in the same neighborhood and is under contract, and we’re hopeful that once it sells, that will help us generate a higher appraisal for the ultimate buyer of The Red Garage House.

If you recall, the sale of this one fell through when it didn’t appraise for what we needed, so having The Hat Trick House sell will likely help us to avoid that problem the next time around.

House #8: The 16-Bid House

It’s now been 19 weeks since we got this one under contract to buy, and we still don’t have a closing scheduled. The title company has given up on trying to get two liens cleared from the title, and have passed the issue on to Fannie Mae, who is now working on getting the title cleared.

The extended contract expires again next week, and we’ll see what the title company has to say before we decide if we want to extend it again or whether we want to just give up on this deal. My project manager stopped by the house last week to check on it, and apparently some kids decided to throw a 4th of July party there (used fireworks on all the floors); there was some other new damage as well, but until we hear something from the title company, I’m not even going to bother spending time trying to run the new numbers on it.

House #9: The Hat Trick House

The Hat Trick House is still under contract, and we’ve already been through two inspections. On the first, the inspector from NACA (the lending program the buyer is using) did a full inspection and made a list of the issue that he and financing agency would be concerned about. There were about 6-8 little things that he noted, with only 2 issues required to be fixed in order to process the loan (inoperable garbage disposal and inoperable gas fireplace).

It turns out that neither of the two issues were really issues — the garbage disposal did work (he just noted it incorrectly) and the gas supply for the fireplace was just turned off at the meter. So when he came out for the re-inspection of those issues today, it only took about 5 minutes and everything was signed off.

The next (and hopefully final) hurdle with this loan is the appraisal. As I mentioned previously, the offer was significantly higher than the asking price (based on the way the loan is funded), so it must appraise for a good bit more than we had expected. It turns out that NACA has their owner appraisers, and that they will fund up to 110% of the appraised value of the property. So, we only need to the appraisal to come back at 10% below the offer price, which is good. And the fact that they are using in-house appraisers is also good.

I’m still concerned about whether this property will appraise high enough or not, but everyone is so motivated to make this deal go through (especially the buyer), I have a feeling we’ll figure something out regardless of where the appraisal comes in.

House #11: The Sunglasses House

If you’ve been following the progress we’ve been making on this one (rehab video #1 and rehab video #2), you know that we were planning to complete the exterior landscaping and the interior painting this week. Well, we finished the landscaping, but instead of painting the interior this week, we switched things up and had the tilers come in to tile the fireplace and the shower instead. We also had our pest control company come in and do termite and rodent treatments.

Next week, the privacy fence goes up, the gutters go up, and the interior will be painted. After that, it’s down to reinstalling the HVAC systems, installing cabinets, fixtures, flooring and the finishing details.

My brother and his fiancee will be purchasing this house, and the last big renovation decision they need to make is whether to put a window in the downstairs “bedroom,” thereby officially making it a bedroom (county code requires an egress window or door to the exterior for the room to be considered a bedroom).

House #12: The Mini House

This property has garnered a lot of interest over the 3 days since it was listed. We’ve already had two showings and we have another three scheduled for this weekend. In fact, the first person who looked at the property has been back again, and supposedly she is planning to view it again this weekend with her family.

The only problem we face is that all the potential buyers we’ve spoken with would be getting FHA loans, and with the FHA 90-Day Rule, we wouldn’t be able to to sell to any of them until at least the end of September. Of course, FHA can take 45-60 days to process anyway, so even if we received an offer this weekend that we wanted to accept, the time frames aren’t that unrealistic.

That’s the scoop for this week…have a great weekend!