October was a very busy month for my fix and flipping business. I sold three fix and flips in October, bought one fix and flip, one more fix and flip is on the market and a couple more will be on the market soon. I had ten fix and flips for a long time and it was nice to finally get some sold, but after buying one in October and another in November I have nine in my inventory. Not only did a lot of buying and selling activity go on in October, but I had more contractor drama.
Fix and flips sold in October
I sold three fix and flips in October, which may be a record for one month. I really needed to sell these properties, because the carrying and repair costs add up with ten fix and flips.
Fix and Flip Sale One
The first property I sold on October 3 and I briefly discussed in my September fix and flip update. I did not make a lot of money on this property after all the money was accounted for, but I made a profit. Here are the rough numbers:
Carrying Costs $17,000
Selling Price $175,000
$10,000 is a profit, but much less than I hope for on my flips. There are a couple of reasons I made so little;
- I bought the house for too much money. I did not have many flips at the time and I was in a hurry to buy something.
- I under estimated the repairs. I thought I would spend about $15,000 on the repairs, not $25,000. We ended up putting in a new kitchen, replacing some siding, replacing a bathroom and doing a lot of minor unexpected repairs.
On the plus side I made more than $10,000 because I am a real estate agent and I made a commission when I bought the house and when I sold it. On our profit and loss I did not include those commissions which were $3,750 and $3,500 making my total profit about $17,000.
Fix and Flip Sale Two
The second fix and flip I sold in October was a house I bought in April for $81,200. The house was an estate sale and needed a lot of work, but again needed much more than I was planning on. I was thinking I would spend about $25,000 on the repairs on this home and ended up spending about $40,000. Part of the reason the costs were so high was I used a new contractor who I am sure overcharged me. Not only did he overcharge me, but the inspector for the buyer found a few items that needed to be fixed and my contractor disappeared! He would not answer calls, texts or emails. Here are the numbers:
Purchase Price $81,200
Carrying Costs $15,000
Selling Price $150,000
I again saved money on the commissions for this house on the buy and sell side, which were $2,436 and $3,000. My total profit was about $19,000 on this flip,but should have been closer to $30,000 if I had a good contractor on it.
Fix and Flip Sale Three
This flip I bought way back in December of 2013 for $77,187. It took me almost a year to flip this house because of more contractor problems. The first contractor I used did not do a good job; he missed many repairs including a new roof. I listed the home back in July for $139,900 and I got an offer right away, but the contract fell apart due to inspection items. I ended up lowering the price to $132,900 and I got another contract that fell apart due to inspection issues. Instead of making the repairs or lowering the price, I took the home off the market and made the repairs with a different contractor. I then put the home back on the market in September and we got an offer right away that closed in October! I listed and sold the home for more than if I would have made the repairs with the first contract. Here are the numbers:
Purchase price $77,187
carrying costs $14,000
Selling Price $144,900
After factoring in the commission I saved of $2,315 and $2,898 I made about $35,000 on this fix and flip.
Fix and flips bought in October 2014
Since I sold three fix and flips in October I figured I better buy one as well. I got this house under contract in September and closed on it in October. I gave myself 30 days to close, because I knew I needed some other flips to sell before I could buy another property. The house was purchased for $75,000 in a town that rarely sees homes for sale for less than $150,000. The home was first listed for $100,000 and went under contract right away. The contract fell apart and the seller lowered the price to $75,000. I quickly made a low offer of $50,000 to see what the seller would do, because I was not terribly interested in another flip at the time. The seller would not budge from their price and after some thinking I decided that $75,000 was a great price for the home.
The house was another estate sale listed in the MLS and will need a lot of work. The home is a little two story that looks a little like a shack. I plan to rebuild the staircase, add a porch or something to give the house some character and redo the floors and paint everything. The biggest concern is there are some major foundation cracks that will have to be repaired. I figure I could easily spend $30,000 to $40,000 on the repairs, but I think it will be worth over $150,000 when I am done with it. After carrying costs and selling costs that would leave me with a profit of $25,000.
More contractor problems with my fix and flips
I have had a lot of new contractors working on my properties and some have worked out great; others have not. I had a new contractor who worked on the third flip I sold in October and he did a decent job at a good price. I had him start work on another flip that I have, but things did not go so well. His prices started to increase and he did not want to do repairs like replace windows that are a basic job of a contractor! He was taking a long time to respond to my emails, his prices were rising sharply and he didn’t seem to keen on my ideas of what should be done. We have parted ways and my brother in law who helped fix up a few properties for my dad and I in the past is now working on that house.
Progress on my other flips
Managing eight to ten flips is not easy; it is really hard getting them repaired in a timely manner. I do have two of my other flips on the market, but they were not listed until November. I have another flip that should be ready in the next week or two and three more flips that are a month to two months out still, but have contractors working on them. I have the two new flips that I have not assigned a contractor to yet. I am starting think maybe wholesaling properties to other investors is a better business model to get houses sold faster! Below is a before and after video of one of my flips on the market.
I am still very busy flipping and I love doing it, but I wish I could sell my houses much quicker. I am also going to change my direct marketing techniques soon, which I will write a new article about.