House #41: Final Analysis

December 7, 2012 · 7 comments

We wholesaled The Next-Door House earlier this week for a profit of over $18,000…

While our primary business is rehabbing and reselling houses to owner occupants, we’ll never turn down a good business opportunity, and that’s what this sale was. The market here in Atlanta is crazy these days — very little inventory and lots of investors clamoring to get their hands on anything. So, when we closed on The Next Door House last week at a tremendously good price, we decided to throw it on the market as-is (never even turned on the utilities) and see if we could find another investor who would be interested in buying it at a substantial markup.

The day after Thanksgiving, we listed the property at $24,000 more than what we purchased it for, mentioned that we were only looking for cash-buyers, and our phone started blowing up. Every call was the same, “How many offers do you have? Is the property still available?” Within three days, we had several offers at or above list price.

We could have sold the property for more than we listed it for, but we actually decided to sell it for less. The buyer is another investor we’re friends with, and he has purchased several properties from us. He also was the first to submit an offer on this property. We’d rather sell for a little less to someone we have a great relationship with than to try to eke out every penny — long-term, this business is about relationships.

Anyway, we likely made about 50% less by wholesaling the property than by rehabbing it ourselves, but considering that we didn’t have to do any work or take any risk, it was well worth it.

Here is the full final analysis for this one…


Here are the key timeline milestones:

  • Purchase Offer Date: 9/12/2012
  • Purchase Closing Date: 11/21/2012
  • Rehab Completion Date: N/A
  • Sale Listing Date: 11/23/2012
  • First Sale Contract Date: 11/25/2012
  • Final Sale Contract Date: 11/25/2012
  • Sale Closing Date:12/5/2012


Here is the breakdown of financials for this project:

Next Door House Financials

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: 70 Days
  • Rehab Time: 0 Days
  • Selling Days on Market: 3 Days
  • Selling Close Time: 10 Days
  • Total Hold Time (Close to Close): 14 Days
  • Total Profit: $18,494.74
  • Return on Investment (ROI): 38.98%
  • Annualized ROI: 1016.19%

7 responses to “House #41: Final Analysis”

  1. Luis says:

    It’s awesome that you worked this out. But what has me scratching my head; I have also noticed the buying frenzy you talk about, so how were you able to buy the house in the first place? How were you able to get such a good deal without getting outbid?

  2. J Scott says:

    Luis –

    We’ve been working on building our relationships with all the big short sale agents in the area, and this is one of the agents we’ve gotten to know. She knows that we can close quickly, all cash and are very easy to work with, so she was happy to “encourage” her seller to go with our offer over the others. She actually let us know about the property coming up for sale before she listed it, so we had an accepted offer the day it went on the MLS, before other investors had a chance to even see it. We also paid a little bit more than list price for it, which made her seller happy as well, as she thought she was getting a great deal on the sale.

  3. Luis says:

    Thanks for the response.

    Knowing you guys this strategy makes perfect sense and I can see how you pulled it off.

    What I find surprising is that it was listed at a price attractive enough that you could even afford to offer above listing. All of the short sales I find are listed at 10-20% under ARV. So to get to 50% of ARV, which is where I need to be, my offer has to be quite a lot lower than short sale listing price. So when I send in an offer like that I get the “talk to the hand” treatment.

  4. J Scott says:

    Hey Luis,

    Good agents realize that short sale sellers aren’t going to be walking away with anything, and if done right, they shouldn’t owe anything either. So, good agents will list the property well below market to get lots of interest, and then do their best to convince the seller and the lender to go with the offer that has the most chance of closing.

    A lot of people think the agent has a responsibility to the bank/lender to get the best offer for a short sale, but in reality, the listing agent only has a responsibility to the seller, and that means getting the deal to close at any cost (which generally means a low approved price).

  5. Kristine-CA says:

    Hey J. Thanks for posting an inspiring and upbeat update to close out my Friday! Just love hearing about the details. 2 questions. 1) What’s your buyer’s plan? Is it a buy and hold for him? Will he clean and repair only as necessary and rent asap? And 2) In your original post for this house you said you were aiming for $20K profit on a rehab and 15K on the wholesale. Above you say you think you made 50% less profit by going wholesale. Was this house a candidate for a $36K profit? It looks similar to other houses that have done well for you, but I’m curious. Your purchase price was fincredibly good. Hell, I think your buyer’s price was great. Again, congrats!

  6. J Scott says:

    Hey Kristine –

    First, thanks for your inspiration “off site”…always appreciate your advice and ideas!

    Regarding your questions:

    1. The buyer is a buy-and-hold guy. He’ll be doing some basic cosmetic renovation (likely on the order of $5-15K) and then renting.

    2. Sorry, when I said “50% less,” I actually meant that we could have made “50% more” (meaning about $25-28K in total) by rehabbing. There was some unknown here. We likely could have rehabbed and gotten it under contract for what would have made us at least $30K, but we also likely would have had appraisal issues, and our actual profit could have been as little as $20K if the appraisal came in low. I’m assuming that the appraisal would come in somewhere between worst-case and offer-price, which would have put us at around $25K profit. This unknown was part of why we were happy to wholesale.

  7. Matt K says:

    The appraisals have been real touchy in my market too. We have buyers clamoring to pay higher prices for our renovated homes, in most cases with multiple offers above the asking price….. only to have the appraisal come in lower than where all the offers were.

    Seems like the appraisers are really walking a fine line here and they don’t want to mess up

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