House #8: Final Analysis

September 18, 2009 · 5 comments

We closed on the sale of The 16-Bid House today. It was a partial rehab and quick resale to another investor. Below is a final analysis of the deal, including financial results and statistics…


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


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:

The 16-Bid House Financials

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%

5 responses to “House #8: Final Analysis”

  1. Jingle says:

    I’m amazed that you can buy a house in that nice of condition for $39K. What is the neighborhood about? War Zone? Maybe I should head south. Did you have your 10K EM sitting in escrow the whole 6 months, and why so much EM? Congratulations on another profitable deal!


  2. J Scott says:

    Jingle –

    The house didn’t look nearly as good before we did the paint, siding, and drywall repair. But, it’s amazing how much better a house can look with just the inside and outside painted…

    The house is in an area that was just starting to be built up when the recession hit, so the neighborhood is best described as “transitional.” Definitely, definitely not a war zone (I’m perfectly comfortable letting my pregnant wife go there late at night to lock up houses, if necessary), but a good number of foreclosures and lower-middle class families.

    Yup, had $10K locked up for 6 months. I generally offer large EM deposits because it shows the bank/seller that I’m serious, and they’ll often accept my offers over higher offers that have less EM and more contingencies. In this case, I didn’t expect my money to be locked up for that long!

  3. Jingle says:

    You are much more patient that me. I’d be pulling my hair out if I had to wait 6 months on a deal to close….. Paint is a cheap and amazing substance…..we are in agreement on that. Is there any new residential building going on in Atlanta?


  4. Jangle says:

    May I ask what sort of commissions you’re receiving on the sale?

  5. J Scott says:

    Jangle –

    My wife and I are both licensed and we list our properties ourselves. For accounting purposes, we pay ourselves a 3% commission on each sale, just like we’d be paying another real estate agent if we were to have someone else list it. You’ll notice that under Selling Costs, we deduct 6% in total realtor commissions — half of that goes to the buyer’s agent and the other half comes back to us (as noted in the Commission Costs section).

    Again, this is for accounting purposes. The numbers would work out the same if we just chose not to pay any commission on the listing side.

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