Author Topic: Opportunity to Flip in progress  (Read 1972 times)

Pav

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  • Age: 33
  • Location: Hudson Valley, NY
Opportunity to Flip in progress
« on: June 08, 2016, 09:38:35 AM »
My SO and I have recently been perusing homes, interested in moving closer to her parents, or closer to my job, or somewhere in between. After a conversation with a reputable real estate agent, it seems as though we could sell our home for more than we originally thought.

Market Value: $170,000 (via Real Estate Agent)
Original Purchase price: $60,000 + $40,000 in 203k Renovations
Original Mortgage Amount: $100,000
Interest Rate: 4.25%
Mortgage Term: 30 yr
Term remaining: 26 yr
Amount remaining on mortgage: $82,000
Principal and Interest: $500
Taxes and Insurance: $460
_________________

Net Monthly Income: $2750 + fluctuating commissions $400-800
_________________
Monthly Liabilities:
Car:                  $140
CC:                      75
reno CC:             130
Student Loans: $167
MTG:                 $960

So the real estates agent suggests we paint the interior/exterior of the house, refinish the hardwood floors throughout, and some additional minor updates.

The total repairs/renovations are estimated to cost $12k-13k. Without these updates, he imagines we could list it for $120k, and get low ball offers from flippers. So if we do the flipping, we can net the profits and use it toward killing off all debt, and having 20% down payment funds for the next house, plus replenish the emergency funds.

Even if the agent misses the mark by 10-20k, I feel that I can still dig myself out of the hole and have enough to put down for the next place. I'd like to avoid PMI, but zero-ing all CC debt, Car loan, student loan debt is more of a priority.

Here's my expected list of payoffs

 82,000   -   MTG
  5,000   -   Car
 13,000   -   CC from Reno at 0%
  8,750   -   Closing Costs
  3,000   -   Law office + Title Insurance
  7,400   -   CC Existing at 0%
16,000    -  Student loans
 30,000   -   Down Payment

165,150 - sale price would cover most everything. anything over that is gravy.

Am I missing anything? I think I conservatively padded my costs. This seems like a great way to execute an unplanned slow flip and crush my debt. I know there's risk with financing the renovations on CC, but it's all at 0% for 12 months. I expect we could sell well before then. We're looking at houses that are listed for $150k or less, so our payment and total mortgage amount wouldn't creep up that much.

any thoughts?

thanks in advance

Pav

  • 5 O'Clock Shadow
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  • Posts: 25
  • Age: 33
  • Location: Hudson Valley, NY
Re: Opportunity to Flip in progress
« Reply #1 on: June 14, 2016, 10:57:33 AM »
Update:

We've got the exterior paint finished. Original estimate was $4500, and then an additional $700 in miscellaneous carpentry to pretty-up door/window trim.

We are also in the midst of having all the floors refinished. Sanding and first coat of poly should be done today. Tomorrow, final coat of poly. ~$2000

Original doors have been stripped $1000

Then next week we will start with the interior painting. ~$3000

This weekend, I will install a new exterior door, and upgrade our bathroom faucets, and tack up crown molding in the dining room and downstairs bath.

Still on track to have the place listed by July 4th weekend, and within the expected total reno costs.

updates to follow on listing, and the pursuing  nerve-racking simultaneous sell/buy transaction...

Pav

  • 5 O'Clock Shadow
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  • Posts: 25
  • Age: 33
  • Location: Hudson Valley, NY
Re: Opportunity to Flip in progress
« Reply #2 on: June 27, 2016, 12:06:37 PM »
Update as listing date approaches:

Floors are being touched up, Interior paint is finished, new exterior door is installed.

I still have to pick up, finish, and install the stripped interior doors. I also still have to install new faucets and finish some trim work around the inside of the ext door.

All in all, still on track to list sometime July 4th weekend.

At that point we can start our new home search, based on mustachian principles.

Pav

  • 5 O'Clock Shadow
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  • Age: 33
  • Location: Hudson Valley, NY
Re: Opportunity to Flip in progress
« Reply #3 on: July 12, 2016, 06:25:40 AM »
We're listed at $165,000. Our original anticipated listed date got pushed by 1 week, with some minor touch ups needed before photos could be done. This listing agent also has a potential buyer coming to look at the place this Friday.

So the original expected listing price has definitely come down slightly, but in the interest of being competitive, and the place not sitting on the market, I'm still happy. We'll see how the market feels.





Chranstronaut

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Re: Opportunity to Flip in progress
« Reply #4 on: July 18, 2016, 08:38:19 AM »
Following along.  We may have the opportunity to do something similar as we bought our house last year as a fixer-upper and may be moving on sooner than expected.

How difficult was the floor refinishing?  Did you do it yourselves?  Our floors are pretty sad, with crappy repaired sections that don't match.  I'm not sure refinishing ours would be worth it.  There are two sections that were obviously just cut out with a saw in the shape of a rectangle, and new boards poorly replaced.  It looks like a trap door into the basement...

Choices

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Re: Opportunity to Flip in progress
« Reply #5 on: July 18, 2016, 10:28:18 AM »
Hi,
I know I'm late to the game, but estimated sale prices of $170k post-painting and pre-painting $120k seem like a pretty big swing. I might have asked for a second opinion or an appraisal. Now you've sunk another $10k+ into the house, but at least it's pretty.

It's great that you want to pay off your debt, but you're not really getting ahead- just trading equity for your car and credit card payments. Please, please, please vow to NEVER carry another credit card balance or finance another vehicle, or the debt cycle will continue.

Pav

  • 5 O'Clock Shadow
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  • Age: 33
  • Location: Hudson Valley, NY
Re: Opportunity to Flip in progress
« Reply #6 on: August 01, 2016, 11:37:14 AM »
Chranstronaut - I had a referral for a local floor refinisher. Had I the time, I probably could've done a better job. My floors had a thick layer of some old obscure lacquer on it. They used heavy grit sandpaper to remove it, but I feel they skipped the lighter grit. So upon a close inspection, you can find swirl marks. But its a huge, huge improvement. I feel I got what I paid for, at $2 / sq ft. Our guy used a stain/tint to match a few stair treads that looked like they were replaced. Our house was built in 1915, and we had douglas fir floors that cleaned up quite nicely, overall.

Julie@ChooseBetterLife - I can see your point, that I am trading equity for car and credit card payments. But if the equity I gained is more than the $10k+ I've sunk into the house, how is that not "getting ahead"? I know that I need contracts and closing before it's "realized".

We've had about 18 viewings so far. So traffic has been good. We've had one lowball offer that didn't respond to our counter.  I still have confidence that this move will help.

Choices

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Re: Opportunity to Flip in progress
« Reply #7 on: August 01, 2016, 04:16:18 PM »
I hope that your improvements get you the price increase you hope for. This isn't always the case, though I wish you luck.