Case Study - Welby Fix n Flip

After

This property was purchased at the end of June 2018 for $195k by an experienced flipper. This borrower requested a hard money loan amount of $180k. Rehab for the property was $35k. The flip took 4 months.

Basics

• Source - Referral to Borrower

• Status - Estate

• Condition - Poor / Hoarder Home / Arson Property - see below before picture

full gut - during construction photo

Obstacles

• Title took a good deal of time to close because several deceased persons were on title. All parties of the transaction had to be patient to await clean title from seller’s representatives.

• Gas and Electric had been off at the home for a significant amount of time that Xcel required the borrower to obtain new service as if the home was newly constructed. This line item was over budget as that was unforeseen for the borrower.

before

condition at time of purchase - hoarder home

Home Value

How Do I Determine ARV?

When looking at purchasing a property for a fix and flip it is important to know what the ARV (After Repair Value) of the property will be after you are done rehabbing the property. The ARV will help dictate how much money you should purchase the property for and how much money you can put into the rehab.

When determining the ARV, you have to pull comparables within the neighborhood or surrounding neighborhoods. By comparables, if you are looking at rehabbing a home that is 1,200 sq. ft. and you aren't going to add square footage, you only look at homes that are near that square footage. It will not help if you are looking at homes that are 3,000 square feet because that won't give you a good idea for what the property will sell for. Choose 5-8 properties that have the following similarities:

• Square footage
• Style (ranch, two story, multi-level, etc)
• Exterior (brick, stucco, vinyl siding, etc) -Unless you plan on changing the exterior of the home
• Amenities (Backyard, Walkout, Attached or Detached Garage, etc) -Unless you plan on adding a garage or a backyard

After you have identified the 5-8 properties that are very similar to the property you are looking at rehabbing, with the exception of level of finishes and whatever you plan on adding, take the average sold price of the homes. That is your ARV.

To determine if the home will make you a profit, look for our future blogs!

How to Make Your Curb Appeal!

Tips & Tricks

• Curb Appeal begins online: Most buyers in today's market look at homes online before ever speaking with a Real Estate Agent. Have professional photos taken that show the exterior of your property.
• Walk a Mile in the Buyer's Shoes: walk around the property and pretend you are purchasing it. What would you like fixed if you were buying this home? If you need a second opinion - get one, the more critical the better. You don't have to fix everything, but it is important to see what the buyer sees.
• How's the Roof?: Not only will most buyers be concerned about a roof, all inspectors they hire will be. Make sure you know if something needs to be done. Better to fix it before getting to the negotiation.
• House Numbers: Can a buyer find the house? If not, that needs to be corrected. With modern fonts, you can really dress up the exterior as well.
• Cleanliness is Next to Holiness: Rent a pressure washer and make sure the exterior is clean.
• Color: Either place or ask your Real Estate Agent to think about placing some colorful plants near the entrance.
• Freshen the Paint: If there is room in the budget, repainting the exterior of the home could add $10k+ to your offer says some Real Estate Agents
• Mow the Lawn: I know that it isn't a big ticket item that buyers get excited about like kitchens and bathrooms, but don't turn a buyer off before they get inside. Make sure the yard looks presentable.

Hope these tips lead you to quick closings!