House #35 / 36: Officially Ours

July 6, 2012 · 15 comments

We closed on the purchase of both The Rookie House and The WI-1 House today…

It looks like The Rookie House is going to be a very, very thin deal — it’s unlikely we’ll make our minimum profit target, and I’ll probably be happy if we make even $5000 on this deal. Just based on our electrical, plumbing and HVAC quotes, we’re already over budget on this one, so it will certainly be a no-frills rehab and hopefully we’ll be able to make up some of the overages in other place. It’s a LOT of work for such a small profit, but there aren’t many deals out there right now, and I’d rather keep the team busy than wondering when the next deal will come along.

Btw, here are just a few pictures of The Rookie House — now you understand why it’s going to be so much work…

As for The WI-1 House, I’m expecting to get up to Milwaukee in the next 7-10 days to get a bunch more bids, kick off the renovations and spend some time with the guy up there who will be managing the rehab for us. I made the mistake of not taking pictures the last time I was up there, so I’m finding it difficult to put together a detailed scope of work for the project, which is making it difficult to get any contractors in there for bids before I return.

Hopefully both of these projects will complete within 8 weeks — we can’t sell The Rookie House for 90 days, so there’s no rush on that one, but we’d love to get the Milwaukee house renovated and back on the market as quickly as possible, as winter starts early up there… 🙂

15 responses to “House #35 / 36: Officially Ours”

  1. Beth McCurdy says:

    Hi J, I’ve been following your website and really love it. I recently became an agent and joined a brokerage. I’ve also joined a successful team as a buyer’s agent within the brokerage. I’ve been searching for a property to buy for my first flip. When you say there aren’t many deals out there right now (I’m in Atlanta area), do you think I should wait until the Fall or keep searching in hopes of coming across something? I’ve been networking with other agents and hoping that something will come my way.

  2. J Scott says:

    Hi Beth,

    Congrats on getting your license!

    Certainly don’t stop looking — even if you don’t find anything, just the practice you’ll get recognizing pricing on different streets/subdivisions and knowing what the trends are is invaluable (I know you’ll keep up with this information just by being an agent, but looking at it through the eye of an investor brings different perspective).

    That said, I’m guessing that August/September should bring a fresh flood of houses to the market here in Atlanta (and maybe across the country), so if you don’t find anything before then, don’t panic and certainly don’t jump on a deal that you don’t think is great. If it means anything, we generally take the summers off from looking at houses, as inventory is generally very low this time of year anyway.

  3. Beth McCurdy says:

    Thank you so much for your response. Flipping houses is my DREAM. My passion is home decor and design. And I have the $ for flipping. I just want to make the right decisions and have spent so much time educating myself including following your blog. It’s a little discouraging when I see no properties out there where the numbers will work.
    Thanks again 🙂

  4. J Scott says:

    Beth –

    Don’t get discouraged. It’s really tough to find that first property (and then actually pull the trigger). But, after the first one, it gets MUCH easier.

    What part of Atlanta are you focused on?

  5. Beth McCurdy says:

    Thank you. I’m ready to get started and have so many ideas. I’m nervous but excited too! Hopefully, something will come in the next few months or so.
    I live in Gwinnett County so I’d like to stay in Gwinnett. But, I’m willing to take a look at the city if the deal is right. I’ve lived in the Atlanta area for 20 years.

  6. J Scott says:

    Hey Beth,

    We’re considering starting to do some marketing campaigns in parts of Gwinnett, and may come across some deals that we’ll be passing on to other investors. If we decide to do that, I’ll drop you a line and maybe we can grab lunch one day and chat.

  7. Beth McCurdy says:

    Wow, that’d be great! Thanks!

  8. Luis says:

    Beth, my 2 cents… like J says you should not stop looking. I made offer after offer from January through April and nothing then in May and June got 4 offers accepted at lower price than my initial offers. Remember that a lot has to do with area and supply/demand in that area. J works in west Cobb and what is going on there can be very different from what is going on in Gwinnett.

    I know that to be true because most of my flips have been in Gwinnett at the same time J was doing some in Cobb and I have noticed a lot of different patterns and results.

  9. Beth McCurdy says:

    Thanks Luis! I work with an other real estate agent who is having success in Gwinnett County right now as well. Glad to hear things are going well for you.

  10. Mark in Fl says:

    What do you think is going on with the high bids on the mechanicals? It seems pretty straightforward.

    Is that a 2.5 ton HVAC?

  11. J Scott says:

    Hey Mark –

    The prices in my spreadsheet aren’t bids, just estimates. I normally pay $3100 for a completely new 3 ton HVAC system (furnace, condenser, coil), so this is what I’m budgeting for this one.

  12. Mark in Fl says:

    Hey J Scott, I was just responding to your comments above on the slim profit due to high rehab expenses. I didn’t realize you had posted the spreadsheet. I took a look and your estimates look good, it just adds up to $40K before you know it. That drywall expense is large. Too bad it didn’t soak just the bottom sheets.

    Are you doing a light texture on the ceilings?

  13. J Scott says:

    Hey Mark –

    It’s because the house was abandoned and sat for so long that they had to remove all the sheetrock. Had the owners gotten back in there quickly and cut out the first two boards (8′ high), there probably would be less than 50% of the sheetrock that needed to be replaced. But, the moisture (and mold) spread quickly when wet sheetrock doesn’t get removed.

    As for ceilings, we generally just leave them flat when we install new sheetrock. That’s what’s typical around here…

  14. James Irvine says:

    I saw the PB on house 35. What was the purchase and then flip sales prices respectively? JI

  15. J Scott says:

    James –

    What did you mean by PB?

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