Here are the final numbers for the Hidden Iron House Flip.
| Purchase Date: | April 18, 2011 |
| Listing Date: | May 5, 2011 |
| Contract Date: | June 16,2011 |
| Closing Date: | July 18, 2011 |
| Total Days From Purchase To Resell: 92 Days | |
We would have closed sooner had we not had the problem with the FHA 90 day flipping rule.
| Initial Costs and Assumptions | |
| Purchase Price: | $25,000 |
| Settlement Fees: | $1,400 (title policy, closing fee, insurance, loan fee) |
| Estimated Repairs: | $8,000 (estimated 10k, but I think we can do it cheaper) |
| Estimated Resale Price: | $70,000 |
| Estimated Profit: | $35,600 minus holding costs and selling costs |
| Actual Resale Price: | $71,140 |
| Actual Repairs: | $8,157.44 |
| Holding Costs | |
| Mortgage Interest: | $960.88 |
| Property Taxes: | $502.86 |
| Property Insurance: | $97.00 |
| Total Holding Costs: | $1,560.74 |
| Closing Costs | |
| Realtor Commissions: | $3,912.70 |
| Our Closing Costs: | $357.95 |
| Buyer Cost Assistance: | $4,268.40 |
| Title Policy & Survey: | $951.35 |
| Total Closing Costs: | $9,490.40 (OUCH!) |
| Actual Profit: | $25,531.42 |
Comments (14)
Thank you for your very insightful blog and website. You mention that you goal is to do 30 deals a year. Have you previously done 30 deals per year? Thus far, your average made in terms of profit is over $30k per house (counting the whole sale deal). Is that typical, or have you been more choosy lately? The reason I ask is that if you take 30 times your current profit per house, you get a large number. What are you assuming your holding period will be per house? If you achieve 30 houses per year, that will be a significant number of rehab crews you will managing at the same time.
It is not my intent to pry into your finances, but I am trying to gauge the size of your business. At some point, you should have the cash to self finance your deals if you so chose.
Gilbert,
Lots of great questions. My goal is about 30 deals a year, but this is to include wholesale deals (though I’ve been birddoggin a lot lately). I do not want to do that many rehabs. We used to have 2 crews busy and at one point 3 crews going (not for long). Not fun.
We typically did between 20 and 30 deals over the last several years. This did include wholesales and properties that we held as rentals and houses that we sold with owner financing. With those kinds of deals and operating expenses, we do not see that number that you’ve calculated. Though I wish we did and maybe someday we will. 🙂
We have been more choosy in that we are trying to stick to light rehabs (with only 1 crew at a time) and wholesale and birddog the rest. The profits for the rehabs will probably end up averaging about 20-25k net. I don’t really assume a holding period, but we are averaging about 4-6 months. Sometimes we get the one that takes over 9 months. Seems to always be at least one of those.
We like to use private lenders because of leverage and the sheer amount of money we have in the deals. In this market, you really need to keep a healthy cash reserve.
Thanks for the compliments and following along.
Hello Danny, I have been following your blog since the beginning and congrats to all of your success so far. You definitely are where I want to be. I appreciate all of your knowledge and real-worldness that your bringing to this game and to newbies like me. You really break it down. So I have visited your website and it is pretty straightforward. Do you have a selling website as well? Im asking because I want to get all of my tools in order before I even attempt to contact buyers and sellers. The whole first impression thing is very important to me. Thanks for your time and my nose is finally out of the books, time to start bugging you guys….just a little
Stephen,
Thanks for the compliments and for following along.
I do have a selling website but we don’t use it as much now that we sell houses through our Realtor. It’s not marketed or anything.
You mention focusing on the first impression and I don’t think a selling website matters in that regard. None of the people selling their house to us even know about ours.
Don’t let this be something that makes you feel like you are doing something to avoid doing the more difficult things for a new investor, like putting out marketing and taking calls. That’s what you probably should be doing.
Start getting used to talking to sellers. Building confidence in talking to them is going to do a lot more for you than having a fancy house selling website.
Always keep in mind the 80/20 rule, where 80% of the results you get are from 20% of the things you do. The other stuff is just busy work. Focus on the most important and result producing 20%.
I’m a glad to hear that you are starting to take action.
Nice website! Great content…
Thanks, Larry.
Danny,
I assume from your replies that you tried your luck listing your houses FSBO and it wasn’t working?
I know you can pay a $200-300 flat fee to put your house on the MLS as a FSBO as long as you agree to pay the buyers agent fees. This could cut total realtor fees to 2-3% + the $200-300 listing fee.
Are there any reasons you don’t(still?) do this? Is your listing agent just so aggressive in selling the properties that you don’t think you could move them fast enough FSBO to make the savings work?
Adam
The amount of work involved with selling FSBO, especially when you always have several properties for sale all over town is just not worth it for us. Getting 30 calls a day from people that are not qualified and do not show up for showings can drain you very fast.
We’ve used flat flee brokerages in the past and they can save people money, but we prefer our Realtor because she is aggressive and very involved. This saves us time and energy which is very important to us.
That makes sense. Being in the early research stage and not an active investor, it’s tough for me to appreciate how busy you must stay just hunting down the deals and managing current rehabs. 🙂
Hello. Just found your blog and am enjoying the details. Thanks for all the sharing. Your market is similar to mine in Central Valley CA in terms of selling prices. You’re working the lower and better houses with similar spreads. I don’t do rehabs, just flips. Now the flipping spreads are smaller and I’m considering doing the rehabs myself so I can get the $30-50 spreads I used to get just flipping. My speciality is title problems/probates and working with sellers with problems (tenants/squatters, legal issues, etc.). I have rehab buyers but am beginning to think that I should keep some to rehab.
Regarding the 90-day FHA seasoning: my understanding of the seasoning regs is that you can’t go into contract for 90 days. It appears you are selling after 90 days but going into contract before that? How does that work?
Thank you for keeping track and posting numbers about your leads. This is not easy to do. Or should I say not fun to do. I’ve been forcing myself to do it for the last 3 months. I’m a very intuitive marketer, and use mostly mail marketing. I send out very targeted marketing to different groups but then never know which letter the caller got. And I never kept track of how many offers I made versus closes. Real numbers are good stuff.
I haven’t yet gotten through all the posts, but do you have any place where you are keeping track of mail volume. I see how many leads you are getting in calls, but no the total number of pieces.
I’m looking forward to more reading here and am happy to share some of my mail marketing stuff. Sorry for the long comment but your buy houses website is first one that made me understand how far behind I am on that marketing tool. My husband designs websites and has been pushing me for years to have one but I always thought they were too…not me. I like being a one-woman show and working directly with sellers but I see now that the right website could let me keep that MO and provide good leads. Again, thanks for the site.
Kristine,
Thanks for showing appreciation for sharing the numbers. It can be very difficult to always keep track of all that we do. That is one of the main reasons why I started the blog. It really forces me to keep track of all of it, which has helped me tremendously to stay focused.
FHA 90 Day: The contract is signed and the paperwork and appraisals and everything is done. Then after the 90 days is up, we redo the contract prior to closing.
Regarding the mail pieces:
For the probate leads, I have calculated 539 letters went out.
For the absentee owner leads, I have calculated 407 letters and postcards went out (Also just realized 1300 postcards also went out to absentee owners – so total was about 1707 letters and postcards).
Great information. I am just starting wholesaling. Can you give me two tips that are crucial in being a successful wholesaler. Thanks
Quick tips for successful wholesaling:
Buy cheap enough so that there is enough room for investors to want the deal right away.
It’s all about marketing and not giving up. Great deals don’t just pop up as soon as you start marketing.
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