REHAB (Updated): An Inside Look at Flipping Houses in Virginia Beach
We have all watched HGTV and seen the tv shows: Rehab Addict, Flip or Flop, Fixer Upper and many others that give us a great look at the life of rehabber (Aka house flipper). The question is, do these shows paint a realistic picture of what really goes on in the rehabbing profession?
Since the birth of the house flipping shows on A&E like: Flip this House, Flipping Boston, San Diego and Vegas they allowed the public a behind the scenes look into the world of buying a distressed property. Where they would buy a house, fix it up and sell it for a huge profit. After these shows premiered, it gave hope to every Tom, Dick and Harry. They realized they too can do this and make a ton of money in the process. So we are kicking off another great series that is going to give you an inside look at flipping houses in Virginia Beach and a real look at the process.
Key ingredients to flipping a house:
-Find Money - Savings, IRA, 401K,Hard Money,HELOC, Money Partner
-Build a team - General Contractors, multiple sub-contractors, Money Partner
-Find Properties - Distressed Owners, Wholesalers, Realtors
-Estimate Rehab Cost/Rehab Length - General Contractor, Bids, Realtor connections
-Estimate After Repair Value - Realtor
-Price Materials - Get the best price on materials
-Do Rehab - All partners, Contractors
-List For Sale - Realtor
-Close/Collect - Repeat
This is just a quick list and a brief overview of the process, I can assure you there are many more details. Fact of the matter is, as a Realtor, I come across foreclosed properties all the time that were started as a flip and the investors ran out of money or estimated everything completely wrong and lost money. This is the real and the raw side of investing that they do not show you on the TV shows.
I currently work with a handful of investors that all flip or rehab houses. These are strategic partnerships that I have pre-qualified their work and made sure it fits the standards I want to represent. Not to be cocky or egotistical but this is what I do for a living. The food that my children eat and beds that they sleep in depend upon me being at the top of my game. Like Warren Buffett said, “If you cost me money I will forgive you but if you cost me my reputation then I will be ruthless”.
If my name is going to be on a property I want it to shine. I want people to associate beautiful homes and quality work with my name when I list a property that has been rehabbed. If there are problems to address I want to make sure the investors are addressing them and not covering them up for a future buyer to find down the road. In return I find quality properties that are 90% broken down with estimated repair amounts, after repair value, selling costs and estimated net returns. I’m not the REALTOR that is going to hand you a list of 100 properties that hit the MLS that day and say “let me know if you’re interested in any”. Each property I send my investors has taken a considerable amount of time to analyze and estimate potential profit. This is how a strategic partnership is born.
In this series we are going to follow one of my investors that we will call “Mrs. C” (keeping her real name out because I have not asked if I could use it yet). Mrs. C is a one woman show most of the time and does the majority of work but does sub out the stuff that would be too time intensive for her. If you saw her you would never expect that she flips houses and I think that’s awesome. It’s kind of like a sneak attack, haha.
I sent Mrs. C a property on February 12th in Glenwood in Virginia Beach. It was 2405 Dabney Crt in Virginia Beach. It was a foreclosed property that was being offered for 215K. It is a 3 bedroom 2 ½ bath home that is 1900 square feet.
When we pulled up to check it out there was literally a line of investors waiting to get in to see it. I thought to myself “great here we go again, a multiple offer property that is going to get bid up to high that the numbers don’t make sense anymore.” A typical finding on VB properties lately. We wrote the offer the same day and we offered $215,501 I like to add the $501, call it a good luck thing but it works and I’m running with it. We ended up winning the bid on the property (thanks to my $501) and we closed on March 23rd.
When we went in there, we saw the typical damage that is in most homes that need to be rehabbed. Seriously outdated wallpaper, old carpet that needs to be torn out, old tile, old vinyl, dated countertops and the whole place needed to be painted top to bottom. Bathrooms needed to be gutted and redone and the kitchen needed to be updated. We saw signs of wood and trim that needed to be replaced, new appliances were needed and some landscaping. Overall the layout and structure was good and it was big, bright and spacious.
So let the work begin: (Week 1)
Master Bedroom & Master Bathroom
-Master bedroom carpets ripped out, walls sanded and prepped for painting
-Master Bath old fixtures and old tile removed.
-The walls were sanded and prepped for painting.
Hall half bath/ Great Room/ Kitchen
-Hall ½ bath fixtures prepped and walls sanded and prepped for painting.
-Great room wall paper removed, carpet removed and all wall imperfections fixed.
-The entire room was sanded and prepped for painting.
-Kitchen wallpaper removed and prepped for painting.
-Old appliances taken out and new granite installed.
-Old Carpet removed from stairs.
-The banisters & walls were prepped for painting.
-Upstairs full bath new fixtures installed, new granite installed.
-All bedrooms up stairs and closets prepped for painting.
There was a lot accomplished this week and we have estimated another 2 weeks for the house to be completed and listed back on the market. Check back next week for week 2 when we install the hardwood floors and carpet the bedrooms. Painting will be complete and we will start attacking the little punch list of items that are still left to finish.
UPDATE: Finishing Product and Results
We finished this flip and sold it very fast. I wanted to post pictures of the finished product and break down the numbers of how it ended up.
We listed the house 5/29/15 for $309,900
It went under contract 10 days later at $306,000
Total time from purchase to receiving net profit check: 115 days
Total Rehab time: 65 days
Total time for sale on market: 10 days
My estimated numbers sent to the investor initially:
-List Price: $215,000
-Estimated Rehab: $30,000
-Estimated Selling Costs(Commissions,Closing Cost Allowance, Title Work): $30,000
-ARV (After Repair Value): $300,000
-Estimated Net Profit: $25,000
-Purchase Price: $215,501
-Rehab amount: $26,000
-Actual Selling Costs: $29,988
-Selling Price: $306,000
-Net Profit: $34,511
For more information on how to rehab houses or if you would like me to send you investment properties please email/call me at 757-477-5462 & firstname.lastname@example.org
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