This is the house I closed on last week. Already have contractor started. I got my contractor to give me a bid and also got a new contractor to give me a bid. The new contractor came in over twice what my contractor came in at. He asked if I wanted him to fax it over and I told him not to bother. He immediately came down half. My guy is getting the job and this guy knows to give me a good estimate next time. 🙂
I will give actual repair costs as they come up. My guy is doing the things in the scope of work for about $4,000. Carpet still needs to be bought and installed. Landscaping. We need a new complete AC condenser and I’m sure there will be other miscellaneous.
[Source: Bandit Signs]
This is a 2 bedroom, 1 bathroom, 907sf house that was built in 1995.
| 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) |
| Resale Price: | $70,000 |
| Estimated Profit: | $35,600 minus holding costs and selling costs |
Exterior.
• Replace rotted /damaged soffit/trim and rotted exterior wood .
• Power wash the exterior.
• Install new light fixtures in front and back (see material specs).
• Install new front door (see material specs – prehung and with new interior trim) with silver doorknob and deadbolt.
• Scrape, caulk and paint exterior trim and garage door (see material specs).
• Repair fence (replace any rotted and extremely warped boards and fix post in back).
• Repair mailbox.
• Haul off construction debris and trash.
Interior
• Remove carpet and haul off.
• Remove blinds and curtains throughout house. Install new white mini blinds in front bedroom and bathroom.
• Install new vinyl stick tile ($25 per 45 sqft at McCoys) in kitchen, pantry, entry, utility and bathroom. About 326 sqft.
• Patch all cracks and imperfections in walls and ceilings. Match texture.
• Replace rotted baseboards with matching. (about 40ft)
• Clean and secure air registers.
• Remove and replace door from bedroom to bathroom with new prehung door .
• Replace door trim where necessary.
• Install new bathroom vanity light and faucet (see material specs)
• Install correct light bulbs in bathroom and where needed throughout.
• Secure bedroom fan cover and remove stickers from windows and walls.
• Remove medicine cabinet and install mirror (sku will be given $50 at home depot)
• Remove towel rings and add silver towel bar above toilet.
• Remove trim around tub and patch the walls.
• Make sure all switch and plug plates match throughout the house. Replace broken ones.
• Install new white toilet seat.
• Check attic for debris and any open wire junction boxes or just anything that would not pass inspection.
• Install new chandelier in dining room ($69 at home depot SKU will be provided)
• Prep interior for professional painting (remove all nails and things attached to walls and neatly caulk and sand) Paint interior (see material spec)
• Install door stops, smoke detectors where necessary.
(not much on this one – the prices may not be accurate as I haven’t checked with Home Depot in a while)
Paint Colors
Interior:
Walls – Realist Beige SW 6078 FLAT
Trim – Extra White SW 7006 SEMIGLOSS
Ceiling – Ceiling White FLAT
Exterior:
Trim – Tony Taupe
Garage Door – White
Bath Sink Faucet: Glacier Bay Builders SKU 247-368 $24.86 (brushed nickel)
Light Fixtures:
Exterior Light Fixture Black SKU 245746 $8.97
Chandelier for Dining Room SKU 884-272 Commercial Electric $65
Bathroom Vanity Light – Hampton Bay Brushed Nickel Finish 3-Light Bath Bar SKU # 837895 ($10)
Comments (19)
Danny,
I emailed you about some help, so over the next few weeks, I want to ask a series of questions with some background on my situation. I have been reading your blog for a month now and I see that you flip houses, buying all cash. I am not in a position to buy this way, but want to market as aggressively as you so. I do have pre-approval from a conventional lender and have enough cash for 20% down (required), with enough left over for repairs. My full time job affords me the ability to cover my bills and holding costs during renovation. Should I wait until I have a good supply of cash on hand before sending letters and setting up a “we buy houses website”?
Simon,
I’m glad you enjoy the blog.
Maybe I haven’t mentioned it in any of the posts, but I’m sure I did in the comments, but I do you private lenders for almost all of my deals. I do not use my own cash.
If you find a good enough deal, it will not be difficult to find someone willing to lend money for the house. You should be buying well below market value. Hard money lenders will usually charge more than conventional lenders, but there are far less hoops to jump through and the decision to loan the money is usually based on the deal rather than your credit. If you can’t pay, they are happy with getting the house back because they know they can unload it for a profit. A good hard money lender will also keep you from making a bad buy. If lots of hard money lenders say the deal is too thin, it probably is. These lenders can move a lot faster as well, so that you can close quickly and get better deals.
I definitely would not wait until you have cash. Get good deals and people will be willing to lend. Go ahead and start your marketing and you can start looking for hard money lenders also.
Hope this helps.
Danny
Danny
Hello Danny,
I have been reading you book, Flipping Houses Exposed.
I am 20 years old and very interested in becoming a Real Estate Investor.
I would really like to know how to go about finding Private Lenders?
Trevor,
Glad to hear you’ve discovered this business so young. That’s awesome! I started when I was about 23, so it’s completely doable.
Regarding private lenders, check out this post: http://flippingjunkie.com/2011/how-to-find-and-approach-private-lenders-the-ultimate-guide
I cover everything there.
Danny
Danny,
Gotta say, again I am impressed. All that work for 4k. I assume that doesn’t include materials, but still pretty dang good. Is this your go to guy or were you able to find him pretty easily?
Jason
Jason,
Actually….that does include materials. This is a contractor I have been working with for over 3 years. The house is small and he is not having to paint much outside. He was working on a house across the street from an REO that I was looking at. He is the general contractor but also works on the jobs.
Danny
Danny,
I just got approved by a hard money lender. Can you walk me through the process after you find a house you want? Do you out a contract on it and then take it to the hard money lender? If the hard money lender says it’s a bad deal, do you lose you earnest money?
Simon
Simon,
I’ll try to answer this the best I can without writing a course on it. This can get into a lot of different things that would take me a lot of time to cover all the bases. So don’t take what I say as the end all be all.
It depends on how quickly your lender can analyze the deal. You should be able to analyze the deal yourself first. If the numbers look good, get it under contract with a contingency for further inspection (i.e., ‘This agreement subject to further inspection of the property within 7 days. ‘) When signing an agreement with a homeowner, put this in the ‘special provisions’ section. If there is not one, make one. Don’t make a big deal out of it. Just tell them you might need your partner to ok the deal.
Then your hardmoney lender can verify that the deal is worth lending on. If they don’t want to, get another hard money lender’s opinion. If they do not want to, you might want to consider calling other investors to see if you could wholesale it for a little more than you have it under contract for. If all else fails, you will have to walk away from the deal.
Let me EMPHASIZE THIS: You should do your best to properly perform your due diligence and deal analysis BEFORE putting the house under contract. If you are unsure of your numbers and the seller needs to have the house sold within a week or will lose it, you might not want to waste their time.
If there is not a lot of competition, you might have time to see if the numbers work by running them by your hard money lender first (if they can work fast).
Yet, another idea: (see this could quickly become a course) Why not start with wholesaling? Get the houses under contract and sell your agreement to another investor. They will close on it and pay you a wholesale fee.
I’d better stop here.
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Danny,
What’s the Sq Footage on this house? How many beds and baths?
Simon,
I guess that would have been helpful. So much info and I forget some of the basics. I updated the post with the numbers.
Thanks.
Good Solid Info !!! I”ll be signing up for your blog. Got any info re: Portfolio lenders ..who “sell their loans/mortgages”?
Danny,
Why replace the carpet? Is there an odor? It looks in tact in the pic.
Bailey,
The carpet had some serious stains and the color just isn’t very popular in south Texas. If the carpet is in good shape, I will usually just give it a shampoo. Had whole houses (smaller) done for about $150 with stretching.
Thanks, Danny.
Actually, when I saw the finished product, it made a lot of sense to change the color. I also found a course I bought a couple of years ago, and the same recommendation was there.
B
Bailey,
I was wondering about that. There was a guru that used to recommend putting in green carpet and I thought maybe that was popular in the north. Always thought it was sort of strange.
[…] closed on the Hidden Iron House this week. I will be working on the final post for the house flip and will be posting that […]
Danny,
I’ve heard that replacing fences can be expensive. I recall from your scope of work you mention replacing rotted and extremely warped boards. From the photo this fence looks dry-rotted. Did you wind up replacing everything or will you be able to salvage most of it?
Your blog is fantastic. Keep up the good work.
Luke
Luke,
Yes, it can get expensive. Typical wood fences around here are roughly $14 a linear foot.
I did not replace everything, just the broken and severely warped boards. The thing is in that neighborhood most of the fences look like that. So it didn’t stand out as a horrible thing.