We closed on The Corn House yesterday…
For those following this blog since the beginning, you may recall that this was the very first house we purchased, more than two-and-a-half years ago. Back when we were originally considering this property as our first investment, my wife and I said to each other, “The goal is just to break even on this one!” And that’s pretty much exactly what we did.
While the other two dozen or so houses we’ve bought and sold in that time have been very profitable (all but one have hit our minimum $15K profit target for flips and $5K profit target for wholesale deals), this one just barely eeked out a small profit (and it easily could have gone the other way!). We made a lot of mistakes on this property — I have an upcoming post that will touch on many of them — and while it was a tremendous learning experience and a stepping stone to the success we’ve had, it’s also been an endless source of frustration and annoyance over the past two years.
So, I guess what I’m saying is, I’m glad to be rid of this house, and other then the lessons I’ve taken from it, I hope I don’t have to think about it again for a long, long time… 🙂
On that note, let’s jump into the final analysis, and remember that because we rented this one for two years, some of the numbers are skewed…
Because we rented it for two years, this was by-far the longest we’ve ever held a property; in fact, even if we hadn’t rented it, the holding time likely would have been quite long. Because we listed this one on two separate occasions (back in 2008 and then again last month), I’ve included two dates for a couple of the milestones below.
Here are the key timeline milestones:
- Purchase Offer Date: 7/24/2008
- Purchase Closing Date: 8/13/2008
- Rehab Completion Date: 10/17/2008
- Sale Listing Date: 10/18/2008 & 3/9/2011
- First Sale Contract Date: 2/9/2009 & 3/19/2011
- Final Sale Contract Date: 3/19/2011
- Sale Closing Date: 4/28/2011
Here is the breakdown of financials for this project:
We will clear about $3400 on this project (after including unpaid utility bills we’re waiting to receive and insurance refunds). Given that we earned over $30K in rent payments and lease-purchase fees, you can see how easy it would have been for us to actually lose money on this one. Of course, we did do two rehabs as opposed to one, so that added a good bit of expense.
It’s hard to determine our exact ROI on this one, as we refinanced about 8 months ago, so the amount of investment I’ve had in the deal has changed at different points in time; at some point I’ll do a Internal Rate of Return (IRR) calculation, but I’m quite sure my ROI will be very low, regardless of how I look at it. For this analysis, I’m going to estimate that my total ROI was about 8% and my annualized ROI was about 3%.
If my wife wasn’t licensed and if we had to pay a 3% commission to another agent to sell it for us, we actually would have lost a little bit of money on this project. Luckily though, we can say our streak of profitable deals is still alive at 20 in a row…
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: 20 Days
- Rehab Time: 65 and 8 Days
- Selling Days on Market: 10 Days (this was for the second listing)
- Selling Close Time: 40 Days
- Total Hold Time (Close to Close): 988 Days
- Total Profit: $3356.08
- Return on Investment (ROI): 8.20%
- Annualized ROI: 3.03%