House #12: Final Analysis

February 5, 2010 · 8 comments

We closed on the sale of The Mini House today…

I’d like to say this was a fun project, but after dealing with four different buyers over the past six months, I’m pretty sick of having to deal with or think about this house.

I take full responsibility for this one not closing back in September — had I attended the appraisal for the first contract we had, I most likely could have gotten the appraisal value to the $85K range, as opposed to $65K, which sunk the deal. While it was unlikely we could have ever gotten an appraisal for the original offer price ($99,000), we have since gotten three appraisals in the $85-88K range, and we would have been happy to take that price several months ago.

Also, the appraisals on this property have been much harder since September, when major flooding hit the area, and essentially wiped out 90% of the homes in this subdivision. We were lucky that our survived completely intact, and that future potential buyers weren’t put off by the neighborhood damage.

Here are all the relevant statistics and financial breakdown for this one…


The total holding time on this house was a crazy 220 days. It was the second-longest it’s taken us to sell a house, and again made even more disappointing by the fact that we should have been able to sell it at around the 100-day mark.

Here are the key timeline milestones:

  • Purchase Offer Date: 5/29/2009
  • Purchase Closing Date: 6/30/2009
  • Rehab Completion Date: 7/20/2009
  • Sale Listing Date: 7/21/2009
  • First Sale Contract Date: 8/10/2009
  • Final Sale Contract Date: 1/21/2010
  • Sale Closing Date: 2/5/2010

The bright side of this whole deal was that the closing time for the contract that finally went through was only 15 days…and this was an FHA buyer! I wish all our buyers could close that quickly…


From the beginning, we had expected this to be a minor rehab, and were hoping to make a quick $15K return. In the end, it was a minor rehab. But that’s where our correct assumptions ended. We didn’t make our $15K return (only about $12,600). And, there was nothing quick about the sale process. In fact, we were fixing minor issues (like a broken thermostat) up until the past 48 hours.

Here is the breakdown of financials for this project:

Mini House Financials

There will be a few more small transactions before the numbers are finalized — insurance overpayment refund, final utility bills, etc — but I expect that we’ll be within $100 one way or the other of this final profit amount.

Our ROI on this project was 82% (we only invested about $15K of our own cash in the deal), and our annualized ROI was about 136%. Not bad, even for the long hold-time we’ve had.

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: 32 Days
  • Rehab Time: 20 Days
  • Selling Days on Market: 184 Days
  • Selling Close Time: 15 Days
  • Total Hold Time (Close to Close): 220 Days
  • Total Profit: $12,604.96
  • Return on Investment (ROI): 82.20%
  • Annualized ROI: 136.37%

8 responses to “House #12: Final Analysis”

  1. chris says:

    great job and the monkey off your back! forget about the selling that happens but the system works you brought right fix it right had it for sell in 20 days great . things happen out of your control flood things good and bad. so what did we learn from this to act quicker on thinks we can control better buyers and plan for getting better apprasals what do you think? keep up the good work

  2. Chris Ranney says:

    J, when I first decided to go full-time into real estate, I was reading 10-15 different blogs. It has been about 6 months and I now have it whittled down to maybe 3-4.(You know who you are LOL). Yours is by far, the one that breaks down the numbers the best. Kudos again brother. Keep up the good work.

  3. Greg says:

    Congrats on the sale. I just started reading your blog on a regular basis, and I’m very impressed. Your cost breakdown for this project was interesting to see, since most flippers don’t like to share this information. 220 days is definately a long time, but it looks like the rate of return held up just fine.

    If this is the second-longest it took for you to sell a flip, what was the longest? My longest was just over 300 days (ouch!).

  4. J Scott says:

    Chris and Chris –

    Thank you!!!

  5. J Scott says:

    Greg –

    The longest we’ve ever held a property (House #6) was 232 days. The thing that property and this property had in common was the fact that we had at least three contracts before we could actually get the deal to close! In fact, both properties had their first contract within a week of putting it on the market.

    To alleviate this problem in the future, we are being much more stringent about the requirements for our buyers. We’re making them put down more money, shortening closing times, and requesting that they use our closing attorney and mortgage broker.

  6. J,

    I have a better one. Bought a property in San Diego (where we invest) that was red tagged by the city (ching ching) so we got a great deal.

    Had to submit plans etc. as per the cities request. Long story short we were on a hill and the city decided they wanted us to pay 7-10k for a biologist and landscape architect to name and put on plans EVERY plant on our property, and 100 feet further which is the canyon and city property.

    Well they found a plant called a coastal sage brush about 100 yards from the house and even though we were not doing a exterior rehab the city bureaucratic sh.. held us up from september to december.

    I miss the appraisal problems on our rehabs. Thank goodness we only paid 305 in a 600k neighborhood or we would have been crushed.

    Here is the guy – you’ll appreciate the numbers we put together since it seems that you are pretty detailed on your website about your results.

    We post individual websites for each of our flips with the actual numbers, updates etc. using google sites. works pretty good and easier to use than our company website which is wordpress.

    Good luck with your deals. Where are you located?

  7. David Ward says:

    Were you guys going strictly by appraisal value and not comps of the area? What were the comps in the area selling for? Were they more toward the 65k range than the 85K you originally intended? I’m just a little confused and would like to avoid making the mistake myself.

  8. J Scott says:

    Hey David,

    I had to go back and remind myself of which house this was! As I recall, there were three things that impacted the appraisal on this one:

    1. The biggest was the fact that just a few months earlier, this area experienced a once-in-500-years flood. Many neighborhoods were devastated (you’ll noticed we bought several “flood houses” in the following two years), including about half of this one. It wasn’t clear if the area was going to get reclassified into a flood zone, and that hurt the value of this particular property tremendously.

    2. When the appraisal was first completed, I wasn’t there…my wife and I were at the hospital having our first baby. I asked our partner to attend, but he didn’t make it. Had one of us been there, it’s quite likely the appraisal would have come in fine (read this: ).

    3. Most importantly, this was back in 2009, at the bottom of the worst real estate market in modern history. Given that, ALL appraisals were difficult, and it wasn’t uncommon for appraisals to come in extremely low. These days, that’s much less of a problem — most appraisals come in where they are expected to these days, and banks/underwriters aren’t nearly as critical.

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