Have you experienced this?
That nasty moment when you’re due to close next week, and a homebuyer inspector will step into your home. And you can see the ceiling of the living room floor. That’s probably not good at all.
In this case, the buyer’s inspector called our realtor, the realtor called my partner, and my partner called me. We thought it must have just happened because my partner was at the property two days ago. My first few questions were whether this delay would close, would the buyer withdraw, and would the buyer think the rest of the house would collapse? My brain was racing at that time. I was feeling numb.
Let’s start from the beginning of the transaction. Reed came from an internet source from another wholesaler. The wholesaler is out of state and he partners with me when making a deal. I locked it for $ 54,000. I sent it to my list for $ 64k. The best offer we got wasn’t that good and came back for $ 58,000.
So I told other wholesalers: “Why don’t we buy a house from you for $ 57,000 instead of splitting $ 4,000? And you keep all the quotas.” He agrees and even lends money to the deal. I offered. I declined and got the money from another source that was much cheaper.
The house was messed up because literally everything was needed. The good news was being able to maintain the current floor plan. As soon as you enter the house, fleas jump on you and hug your pants legs. Obviously they missed humans very much. The dog was urinating in the house. The people who lived there had no electricity, no hot water, no running water. The owner bought a house for her sister-in-law and eventually refinanced it for cash. And, of course, that never happened.
As you can imagine, we had to do everything outside the house, with new roofs, new windows, new HVACs, new siding, and so on. The neighborhood was ecstatic that this house was finally revived. There was also a pool behind that couldn’t be saved. Previous owners were delivering soil to the driveway, but of course they didn’t have the money to take the soil to fill the pool.
A new investor asked me why I didn’t save the pool. The home was the first home buyer price range and we went public for $ 159,900. Two days later I signed a deal for $ 157,000. The pool is not a selling point as the property was listed for the first time at the homebuyer’s price, so there are maintenance and insurance premiums. It will scare most of your buyers. What’s more, more children die in the pool than if they were loaded with guns stored at home.
Where to use and where to save
As for the interior, we needed all the new lighting fixtures, bathroom mods, new electricity and all the new flooring. In a nutshell, we’ve updated everything. The house came out so beautifully that I signed up for the second and subsequent days. But to save money, we kept the cabinets. We painted them and put new fixtures on them, and even though we were cutting corners, we were still able to exceed our budget.
Also, for my ambitious rehab, I don’t want to be cheap with things that buyers can see, such as ceiling fans, appliances, doorknobs, and lamps. The homeowner considers that if you think you have cut a corner with something you can see, you have cut a corner with something you cannot see. The purpose of the flip is to sell quickly and move on. You don’t want to put a mediocre product on the market and leave it for months. I saw it happen before.
Again, this particular rehab is in the homebuyer’s price range for the first time. Therefore, there is no need to put granite in the house. These people are usually happy to see the tiles. What we did was to use a very nice formica countertop that looks like granite. For the bathroom in the common area, we used very nice vinyl flooring that matches the color of the walls and looks like tiles. I hope you get to where I’m doing with this — it’s okay to be spartan, but make sure it’s of high quality as to what it is.
In conclusion, we were still able to close on time. I was able to replace the leak in the ceiling. We bought the property for $ 57,000, invested $ 50,000 and sold it for $ 157,000. There was a seller’s concession given at that final price. Be aware that problems can occur at unexpected times. But don’t focus on the problem. Focus on the solution.
Flipper: What unexpected twists have you encountered recently? How did you overcome these challenges?
Leave a comment or story below!