Why Won't My Flip Sell?
I bought and rehabbed a single family home in "the right neighborhood", really did a beautiful job (more than the other people flipping in same neighborhood) and have it priced competitively (in MLS with a reputable realtor), less per sq ft than the comps. It's been 30 days; all others have sold in 21 or less (some MUCH LESS). My loan matures on Nov 15. This is my first flip-of course I never imagined it would take 4 months for the renovations / cost 30% more than budgeted, etc. Now I'm scared. Should I just slash the price to get what I need to get out? Any advice?
Katie :cry:
Katie,
30 days is not a long time for a property to be on the market
and you should probably adjust time on the market of the comps
according with the season of the year in which they sold.
If you and your broker believe the price is right, I would not
change it at this time. I would be looking into available financing
options beyond Nov 15th and keep marketing the property.
I am a newbie myself, but I strongly recommend to use search
feature on this site and find similar questions and answers from
other investors.
Good luck,
altre
My guess would be that it is either price, house features (including your rehab), or the realtor. But it takes a really crappy realtor to prevent a nice house with a nice price from selling in a good market.
What does you realtor say? Ask her to tell you honestly what she thinks about why it is not selling and about your rehab. It is possible that you think you did a beautiful job but that there is something glaringly ill conceived to everyone else.
Do you have it on lockbox with showing instructionsi n the realtor notes?
Have you tried calling your realtor from a different phone to see if she answers?
Have you had any contracts?
Less than the comps per sqft - be careful of square foot comparisions. Have you actually been in some of the comps to see what they are offering that you are not?
Just some toughts.
check to see the marketing efforts being done by the realtor. Some realtors will do local ads, signs around town open houses etc in addition to the MLS, while others will rely solely on the MLS. Which realtor do you think will sell quicker ?? Maybe your curb appeal isn't too great compared to the others on the block. Something to think about.
[addsig]
The cost of the refi and holding until a buyer comes along might eat away any profit from getting your asking price.
It might be easier and safer to slash the price and get rid of it. Do you have a large enough margin to drastically (20% - 30%) slash the price and still cover your expenses.
Also might be something in the house that looks good to you but not to others. Have friends, realtor, and etc., look at the house and tell you what they don't like.
An example of this - my wife and I were looking at houses for us to live in. We looked at a house were the owners were very proud of the brand new carpets they had installed to sell. The carpets were a hideous lime green color.
I would double check the competition in the area. When I go to list I look more at the active competition then the sold comps.
Here is the basic situation. I have about $277 in this house including real estate commissions, and every little associated cost of the project.
Similiar redos (althought we put more quality in and rewired/rebuilt the ENTIRE electrical system of the house and updated to structured wiring, ethernet, surround sound, etc) sold at $279 in the summer
My House
http://www.har.com/search/engine/indexdetail.cfm?mlnum=8695024&class=1&leadid=6&sTYPE=0
Not Rehabbed
http://www.har.com/search/engine/indexdetail.cfm?mlnum=8055734&class=1&leadid=6&sTYPE=0
So, maybe just slash it and see what we can recoup and call it an expensive education?
Katie
its either price or market appeal {to include how the realtor is marketing the prop.} its either or........km
ok, I've called the realtor. She doesn't think price is the issue. How much would you drop? As much as you could swallow? or just $5K?
KAtie
Katie,
I looked at the Realtor's ad. Personally, I was turned off by the words "remodel" and "kitchen brought down to studs". Why does the buyer need this information? Why not just say "beautiful house in hot neighborhood" and "beautiful kitchen, granite counters, etc." ? If this was my realtor I would have them take out any references to "rehab".
Hi.
I also looked. I agree w/Mark about that wording. You want new, bright, modern, interesting, energizing words, NOT construction terms. Your street pic is also a bit dark. Need back yard pic, too.
Another thought... Did you make sure to offer a good percentage for the selling agent? In my area it is becoming norm to discount a bit, but I have noticed a house gets far less showing if discounted in my county this time of year.
**How bout instead of tampering with a good price, you simply add "seller will give closing help" to get interest going.
Thanx for the advice. Realtor is making changes to MLS now. Dropping the price to $279, hopping to generate a little more interest.
Did you all make money on your first project?
Katie,
In one of the above posts it looked like you said you're about $277k into the property. Was that a typo? I am just asking 'cause your listing price is now $279...
Can we get more information on the deal? What was the PP, amount of repairs, did you do any work yourself or hire it out?
Thanks,
Mark.
i did not read the add but from what the others have quoted it solds like trying to sell a car and saying it was totaled but "i fixed it." they are right it should be worded "brightly". now curd appeal are you happy with what you see. can you say that "you" would buy it at that price. if you can't look at it objectively find someone that can. i have friend that built a beautiful 3 story home for his family. he then remodeled a home on the river. he has had it for 3 years it will not sell. the reason it looks like a dump........he can not see it. i don't understand how he can't. after with his own hands he had built such a beautiful home.......km
I like to put signs out saying 100% financing availiable seller to credit closing costs, you should attract buyers if you give them incentives.
Good luck,
Robert
No typo here... unfortunately I am 277K in this dump...
151K Purchase Price
10 K closing costs (including points expensive investment loan – loan at 192K)
10K GC flat rate – HUGE mistake
15K ownership costs (mortgage, lawn maintenance, electric & water bills, credit card interest)
16K real estate fees (estimating on sales price of 280K
So, were at 202K and then we have repairs / rehab and yes, we did spend 75K in repairs. Major items we tackled.
Remove original wood shingle roof and overlay roof. Deck and replace roof.
Remove all 1955 electrical wiring and rewire with structured wiring/satellites/phones/Ethernet / recess lighting/ceiling fans/fixtures inside and out/etc
Completely removed 2 1955 era bathrooms to studs and rebuilt
Plumbing rough and trim (all new fixtures 3 toilets/one entire new ceramic shower (framing/new drain-shower pan/ tile /door)2 NICE pedestal sinks / 2 vessel sinks/ Kohler faucets, sinks, refinished existing tub/etc.)
HVAC completely replaced inside and out and replaced duct work
Lots of DRYWALL after all the above!
Removed awful old rotten wood deck and overhead structure – landscaped back and front – 10 dead trees removed from back/ front trees trimmed $800 / new wood privacy fence where needed
New sold wood front door
Kitchen taken to studs / new cabinets / granite / stainless steel appliances / ceramic tile floor and backsplash
New cabinets in bathrooms – hall with granite counter
1900sqft of wood floors repaired and refinished
All new 6 panel interior and exterior doors (4)/ new garage door
4000 linear feet of new trim / installed – including 4” base boards / crown molding/ built in storage area in laundry /mud room
$1600 of exterior brick repairs (new ties into studs) and repair where foundation had settled
ceramic tile in bathrooms / mud room
carpet family room
interior and exterior full paint
mirrors / doorknobs – door hardware / towel bars /etc
blown insulation R39 in attic
Converted hall closet to study nook with built in desk/ cabinets[ Edited by katie2918 on Date 10/07/2004 ]
Katie
That was quite a lot of rehab you did to the house. At 75K, does that mean you did most of the work yourself? I found myself in a very similar situation with a house recently. End up changing my strategy to hold and rent. I couldn't see selling the house at such a discounted rate, because it was in fact, a wonderful house. So now there's $500 month positive CF, and I'll hold it in my portfolio.
My 2 $$$
Dave
It all makes sense to me. I really like prices that end in 9s, for the psychological effect.. If all is as you say, you may be facing an odd pre-election stagnation in the market; Houston can be fickle that way (though I lived there years ago), Encourage your Realtor to do another open house. Advertise high and wide. Heck, even Ebay is a valid place to advertise a home nowadays (not auction, just a 'fixed price listing.'). Looks like, even if you did go a little overboard on the rehab, you've got a beautiful home to sell. It'll work out.
It seems t me that you remodeled more than you did rehab. Have you offered to pay closing costs or anything like that? also a lease option might at least get you some clash flowing right now
Katie,
Just curious to know what happened here? I am a newbie too looking for deal #1 still. However, being a former realtor I can strongly say that it is ALWAYS one of the 3 P's: Price, Price or Price. Any problem can be compensated by price. I think someone else sugessted offering seller assistance, great idea. Also, what was your reasoning for going so far overboard with the electrical gadgetry wiring? Do the comps have it?
Let me preface by saying I'm certainly no expert but I have a little experience with rehabbing.
I think you did way too much for a rehab. The interior looks great but there is a lot of money that you spent that the buyer can't see. There is a little rule filmmakers use when budgeting their movie. Make sure it's on the screen. When all is said and done that is all the movie-goer cares about. They don't care if the vase in the background of the love scene is an authentic so-and-so from the Ming Dynasty. They don't care if you fed the crew sandwiches made from the $9.99 a pound gourmet roast beef or the .99 cent grocery store meat. If they can't see it they don't care.
Roof. Obviously necessary but buyers expect a decent roof. Hopefully you didn't put on the 60 year roof the roofing guy tried to sell you. Unlike wiring and plumbing at least the buyers can see the roof.
Wiring. Buyer can't see it. If the wiring was a hazard and needed complete replacement that should have been a red flag before purchasing.
Plumbing. Buyer can't see it.
HVAC. Buyer can't see it.
Expense of rotten deck and dead tree removal. Buyer can't see it.
I'd certainly put solid granite counters in my own house but not in a rehab. Granite tiles would still look nice and be much, MUCH more economical.
The expense you spent on custom built-ins for the mudroom, laundry room probably won't pay for itself.
Insulation. Buyer can't see it (per se). Hopefully you just put enough in for appearances.
Converted study nook. Probably won't get your money out of that either. Maybe will improve "saleability”
What grade carpet, paint, fixtures, etc. Hopefully you didn't' t go with top of the line stuff. Those sinks are nice but I'm willing to bet they weren't cheap.
I like your taste but it seems you remodeled as if you were going to live there rather than putting together a product that will make you a profit. It seems like too much for a ranch in a moderately priced neighbor hood.
You spent way more than is necessary on this rehab. You admit that you made some mistakes with the financing aspect. Too much time rehabbing it. Your holding costs are high.
Winter is approaching and most people don't want to move during the holidays.
I would chalk this up to a lesson learned and try your hardest to get out of this by breaking even. If you can do that I think you've won. Good luck.
JMHO
Hey,
GRGLA beat me to it, but you made the classic newbie mistake of OVERWORKING a property.
Without looking at the pictures (the kitchen and bathrooms do look GREAT, by the way), as soon as I read ethernet and surround sound in a sub $500k house, I know someone went over the top. When I looked at the kitchen, I thought WOW!, that belongs in a $500k house.
Have you thought about a lease purchase? With a refinance after the L/P is signed?
Katie,
Great looking project. Sorry for your problems.
Like the other feller asked, "How much of the work did YOU do, and how much was contracted?" I would think it would be difficult to contract out $75,000 of repairs/improvements and retain a good profit margin at this price point.
I am going to look at my first prospective rehabber this morning, and that is one of my criteria. Is there work I will have to contract out? HVAC, in-the-wall electrical, past-the-trap plumbing, and any heavy equipment work outside are things I would contract out.
On everything else, I need to see the opportunity to make $50-$60/hour on my labor to make the deal worthwhile to me.
GRGLA ,
Great post. Great points.
I was thinking along those lines, but you said it much better than I could have.
Not only must the buyer see value, but it is imperative that the appraiser sees value to recoup the investment in any upgrade.
I think some of the systems upgrades may avoid home inspection issues. Home inspection results drive sales in my area, it seems.
I would expect reasonably current wiring if buying a home at this price point.
Well, not the Cat 5....
But I would suspect the1955 era wiring may not have adequate capacity for today's kitchen, no GFI protection, etc. Was a grounding wire standard in NEC in 1955? I don't think so, and selling a home without it would be a huge red flag. You hit the nail on the head, though, when you said it Katie should have foreseen this.
Regarding HVAC:
My question is, was an economical system put in, or top of the line 17 SEER stuff? No $$$ return on upgraded efficiency, just like no $$$ return on upgraded architectural shingles.
[addsig]
Gonna throw this out there but I would raise the price. You might also raise the amount of commission you will pay to the selling agent.
I've heard stories of rehabbed houses not sellnig that were below market value and as soon as the price was raised, it was sold quickly. People can be suspicous of a very nice house below market value.
Interesting points you all raise. Not sure if you are aware of Houston real estate market. In Houston $277K is relatively “upscale”- this price point expects things to be nice. This is a pretty nice inner loop (read good location, not ‘burbs) neighborhood and all my comps had solid granite counters, quality appliance (some Jenn Air) decent carpet and Sherwin Williams paint were used. I did very little work myself. I did some demolition and all the cleaning, some shopping. But not much sweat equity in this house. My husband and I both have full time jobs and 2 small children. We also read that if you try to do it yourself you’ll waste time and that will cost more than paying it out? We figured we were willing to make less and pay it out. Electrical is over the top because my husband is an electrical contractor. House had no ground. To add anything (and keep it to code) we had to redo the wiring. Other houses in the neighborhood had added recessed lighting. They did it without permits and probably didn’t redo the wiring. My husband just felt he could not be responsible for putting someone’s family in danger in that way. So, if we wanted to do anything-we had to do everything. Once we made the decision to cut out all that drywall, we just went for broke. Our cost was very small on this. Plus, we thought it might make it “shine”. Hall bath sinks were only $98 each at Lowes. We used bone yard scraps of granite in the hall bath (less than corian) and saved money by not having them undermount the cheaper sinks.
In Houston, I thought we’d get killed by not putting in insulation-attic had virtually none to start, then all the contractors doing work in the attic (electrical, roof crap falling in, plumbing). I mean, it was 110F outside and the low SER a/c unit we put in was running 24hrs. We put in a lot of good insulation. I guess I just couldn’t do things half assed. So, will I never make money if this is my attitude?
House was in foreclosure. They wold not allow any inspections. So, we knew the ac had a serial # from 2001 and figured it would be ok- wrong assumption. It had been flooded (this area had a bad storm about 18 months ago) and could not be repaired. The interior unit was from 1976 – just wasn’t thinking this was going to pass inspection (but I may have made a mistake there). The ducts had some mold in them, so we replaced that, again fearful of inspections.
Was it a mistake to buy a home in foreclosure / much below market value / leaving to many unknowns?
What would you have done-what would you have skipped. How tough are inspectors? How do you avoid all the have to dos to keep things passing their building inspections?
Katie
Quote:What would you have done-what would you have skipped. How tough are inspectors? How do you avoid all the have to dos to keep things passing their building inspections?
You hit on it when you mentioned that you weren't allowed to inspect the house. I don't think beginning rehabbers should invest in properties they can't inspect. As you are learning there is too much that can go wrong. Once you've done 5-10 properties you'll have a better feel for what's involved.
If you had inspected it you would have known about the wiring, plumbing, HVAC etc. and you would have been able to know whether or not you can make money on this deal.
How much did it cost to remove 10 dead trees? That alone might have been a deal breaker.
I don’t like to do things half-assed either but that is in my personal life. Just because you install laminate flooring instead of Italian marble doesn't mean you're doing it half-assed you're just making a decision based on your market's price point.
Is you realtor actively marketing your property? If not then of course she doesn’t mind keeping the price as is. She figures she'll make her commission off of $279 if it sells now or in 5 months meanwhile you're the one paying the holding costs.
Good luck I hope you at least get your money back and hopefully a little profit if the stars are right.
No inspections?
I probably would have walked.
I looked at two today, thoroughly, crawl space to attic. Only way to formulate a projection and offer, IMO.
I can only afford so many surprises.
One I can buy for $50's, one for $140's.
Similar profit potential and marketability.
Will consider looking again at the less expensive one and making offer.
But will crawl under it in coveralls first.
[addsig]
I'm gonna say I probably conservatively could have spent at least 20,000 less and achieved the same appraised value.
You need to learn some tricks to stretch your dollars while creating value.
Just a couple of examples:
Sold granite counters - no way.
At best $40 sq ft, worst $90 sq ft. You can put in granite tile with tiny grout lines that gives you 90% of the finished appearance at best $10 sq ft at worst $25 sq ft. Just about the same look at 1/4 the cost.
Privacy fence I don't know how you did it, but a lot of newbies will put in a new cedar fence spending $1500-$6000.
Cheap way - look in the paper, removed sections of old cedar fence can be bought for $10 a 8 foot section. Doesn't look too great, but purchase more than you need, replace a few bad pickets and PAINT it. Looks like a million bucks for hardly nothing.
New r39 insulation in the attic? You might as well have lit the money on fire instead. I can't hardly think of a situation that would warrant that expense. Not in a fix and flip, maybe in a rental.
Structured wiring? With everything going wireless? No way.
Those are just a couple of things, I'm sure there are so many more where you went wrong here.
It sounds to me that you rehabbed this house to a finish level that you would do to your personal residence, not an investment.
I agree you over rehabbed for the area and style of house. I looked at the 'before' pictures and this isn't what I look for in a rehab, it's just dated but in good condition. I should send you pictures of the 'before' pictures on mine....roaches all over the place, toilet black from god knows what, roaches in the sinks and tub, carpet smells looks and smells like every pet in the neighborhood used the house as a giant litter box....this is a rehab! My advice, look for vacant or run down houses, not neccessarily on the market. I haven't seen an area that dosen't have some or a lot of these. And then, just rehab enough to make it clean and updated- not the most expensive materials but 'nice looking' cabinets, etc. You'd be surprised what that can do to the value. I hope this helps.
Sharon
Sharon and all,
Thanx for the advice!
Those weren't before photos of my finished hose. That's another comp currently on the market. My house was vacant, foreclosed upon, wet and nasty. Maybe too much so, and thus it just took to much work to get it sellable. You don't even want to know about the creatures lurking inside...
I ended up getting 3 offers on the house yesterday- so I'd have to guess that price was the issue (or just weird luck). I think we'll end up close to 279K and should break even. Thank goodness! Since I won't make any profit, but did learn tons and should save on taxes with the extra mortgage insurance-I'll take it as a positive adventure in real estate investing.
I'll be hanging out on the financing forum and looking for ways to try again, with less holding costs. If only we hadn't paid the contractor 10K - I'd have a little something...
Should I try again in same neighborhood since I'm no so familiar with the area, comps, etc? Or would you suggest moving to a lower price point?
Katie
Katie- it doesn't matter if you move to a lower or even a higher price point. If you go about it the same way you will end up right back here again. While focusing on the price of the neighborhood is part of the equation, rehabing just up to the your buyers expectations is the most important, no matter if it is a $50,000 house or a $500,000 house. Your only problem is not rehabbing to a level that fits what you would want to live in, but what will make buyers put in purchase offers while still making a nice profit.
Katie,
I looked at your property listing and agree that you have been overly specific in your development of the interior. If the back yard is indeed a ravine as the listing says, then I would bail as quickly as possible. Maybe do seller financing to get your investment back over time. A couple of details: Cat-5 wire will not carry 200 amps. The front sidewalk looks narrow and uneven in the picture. If that is true, I would have replaced that first. Could you rent the place for a positive cash flow? That might be a good measure for future investments even if you do not intend to landlord, there are always investors looking for such properties. Good luck. LL
Quote:House was in foreclosure. They wold not allow any inspections.
Katie,
Would you explain this comment? Did you purchase from an owner threatened with foreclosure? Did you purchase from the foreclosing lender (or even HUD) after foreclosure?
If you purchased from the seller, did the seller refuse to accept a purchase contract with an inspection contingency? If you purchased from the foreclosing note holder, did the bank have an "as-is" rider instead?
I am trying to understand who refused to allow you to get a home inspection and why,
So, just to beat a dead horse...
I still don't really understand what y’all would have done differently. You all say I “over rehabbed” the house. Did this happen because of decisions I made along the way-or because of the mistake in buying this dreadful property in the first place?
All the redos in the neighborhood had solid granite countertops; you still think I could have gotten away with granite tiles?
Electrical is not really an issue as there was no real cost other than time (so let’s value it at 1000). I don’t really know my electrical info-that’s my husbands only involvement in this project. He handled it, it’s to code and looks great. I love having an Ethernet at home, thought others would as well.
Other than that, what did I do in the rehab that was so wrong? I only put on 20-yr. shingles. I put in paint grade cabinets / low-end stainless steel appliances/ low seer a/c –cheapest 4 ton unit I could get. All my plumbing fixtures where Lowe’s brand middle of the road choices / .89/sq ft for ceramic tile / mid range carpet in the 2 rooms that have it. Left original, single pane windows. I’m still not clear what I should have done less.
I know you say insulation was a waste of $690. But what would you have done when it came up as a red flag on inspection? Would you really have offered a house with no insulation in Houston Texas? I’d like to know, because I’d like to try again and actually make some money this time.
Katie
A couple of points.
First, I too think that you may have "over-rehabbed" the property. In fact, several times in your posts you mention it yourself. (example: Similiar redos (althought we put more quality in and rewired/rebuilt the ENTIRE electrical system of the house and updated to structured wiring, ethernet, surround sound, etc) sold at $279 in the summer)
However, I, nor anyone else here, can truly say what they would have done differently unless they are there looking at the property and know the market. So, basically, you'll just have to figure this one out on your own.
Second, you mentioned that the seller "wouldn't allow" any inspections. I have never heard such a thing. If you are the buyer, you can get all the inspections you want, period. If it was listed as "as, is" that doesn't mean no inspections. It simply means that the seller isn't warrantying the property and anything you find wrong, they won't fix. If they truly wouldn't allow you to have an inspection, I'd walk, no run, from the deal.
Finally, if this was a "good deal" when you bought it, it should have been a good deal when you sold it. If it wasn't, then you need to review the complete deal and find out at what point it went wrong.
Roger
offer the re agent $1000 cash if its sold withen 10 days
Katie in Katy,
Might try a tax forfeit sale next time. Often some single family homes, you can check them out (sometimes thoroughly) before you bid. Try www.Publicans.com, they have a lot of TX sales. Or call the Harris County Assessor's Office, ask when the next tax forfeit land sale is. You can also scour many sites offering foreclosed gov't property at http://www.hud.gov/homes/homesforsale.cfm.
Guess my advice is, don't nec. give up on foreclosures, but cast a wider net!
Katie- Relax. The season is slowing down. 30 days is not a long time for a home to be on the market. Drop the price a thousand or two, nothing more. Just wait.
Joe
Katie,
How many "buyers" have been inside? Has it been on any kind of realtors' parade? Is there a flyer available outside the property that would cause passers-by to stop and pick one up? Has your agent placed color pictures in local media? What is your commission to the agent? Did you think about setting a commission schedule of 7% if sold within first 30 days after listiing, 6% during second 30 days, 5% during last 30 days? And you did only list it for 90 days with this agent, right? If you didn't limit contract to 90 days, how long will it take you to "sit" it out? Did your agent say something like, "Oh, but my agency doesn't do it that way/won't allow me to do that/has a set commission structure,etc?" If so, please remember that you are the principal, they work for you and next time find an agent that will do it your way. Surely there is an agent out there hungry enough to take a non-standard listing! If not, the agent might be: a - not hungry; b - has hands tied by broker; c - does not have your best interests at heart.
Just some food for thought,
Bob
8-)
Katie:
Dont cry! You need to try some guerilla marketing strategies....
#1- Talk to you realtor about their marketing strategies. They need to be running and ad as well as having open houses...
#2- Make a flier offerring no-money down and hand-deliver it to all the real-estate offices in your area as well as the neighborhood. You can pull this off by using the Hart Program or Nehehmiah Program.
#3- Next time you go to flip, list it with one of those MLS Listing Services and offer 6% to whoever sells it.
I would recommend you take a course on selling houses fast by Ron Legrand or Robyn Thompson....
Best Regards...
Jeff Adam
[addsig]
You didn't have a "unique selling proposition". For your own sake, learn what it is, instead of me telling you.
Z
I did actually have a USP. We even developed a little “tag line”…
Moore Homes, restoring Houston's heritage one beautiful home after another. Our business plan was to have the highest quality rehabbed / most well done homes on the market. I didn’t just want to slap it together like so many people I’ve been watching have done. I wanted to do it all right, meet building codes, make it attractive and use my keen attention to detail to create an end product that even I would want to live in. This is what I did and I think in the end it worked. I ended up with a BEAUTIFUL end product. Every single realtor and prospective buyer that went through this property reiterated this. I ended up getting the highest ppsqft this neighborhood has ever sold for without a pool. I think I’ve made a good name for myself and if I choose to do another house in this neighborhood the realtors will remember that I did it well. We will only break even on this house, but that was mostly due to my mistakes in the purchasing side of this property. I paid too much and didn’t have enough built into the budget for the high interest loan I acquired and the contractor that was a total scam-should have fired him in June. I could do it again, with lessons learned and profit.
I’m trying to put the financing together right now for project #2. Thank you to all.
Katie
Good Luck Katie, I've been following your posts since this began. I feel like this, as long as you are happy with your end result then that is all that matters. Personally, I wouldn't want to do sub-quality work either. Also, you noted that your main mistake was paying too much for the property, Lesson learned, right?? Good, now go get another and keep on doing it. You came out of this one barely unscathed but you came out of it. How else are we to learn from our mistakes other than to make them. Luckily, this one didn't bring you down.
Good Luck with your next project, this time make tons of money off of it
quinn
Remember that although you did not obtain your monetary goals you didn't "fail" you only know what doesn't work! You have guts and you will succeed!
Katie, there is always the possibility that you could have gotten your $300k(+) price! I thought the pronouncement that this deal was dead was likely premature.
The sales market always slows after end of summer. Thats when you entered the market with this little jewel. You needed more time to let your final buyer find you.
The guerrilla marketing advice was good. Become as good a marketer as you are a rehabber.
If there was an overriding mistake in it all, it might have been your time crunch that forced you to lose perspective. The work was oterwise excellent.
I AGREE WITH ALL WHO MENTIONED, OVER-REHABBED!! Dont get me wrong Katie. You did a terrific job here. Go back and look at the comparable unrehabbed property that you showed with yours for a second. Most of the rooms in that red house were o.k. Most buyers that are going in to a single family residential home, are usually a family of some sort. Kitchens are important here. Refacing of the cabinets or adding things that contribute to the old looks but remaining modern can work as a rehab. How about leaving the old cabinets and adding a few fake beams or reals ones. Ones that have black knots or charred markings to match the cabinet hardware. Don't think that just because you know that it is the cheap way out, does not mean you are not giving quality. Someone may actually appreciate your "original" thought process as opposed to "going down to the studs".You as the seller re-habber have to work harder at incorporating old existing looks with some new paint and chrome fixtures added on. Another instance is the bathrooms. Ugly colors of hot pinks and lime greens are hard for the eyes to get past but a $20.00 gallon of paint will get you more of a return than trying to renovate it for $20,000.00. That may sound high for your case but I am not being too unrealistic. I have been on jobs in the Newton-Wellesly area of MA and seen people spend $200 grand on an 8x12 bathroom. I have been in Carpentry now for 15 years. I sometimes have to help in the process of cutting costs so that I don't get cut. It can get out of hand. Again, that rehab is one of the sweetest i have seen. But start off slower next time. The only time these exclusive rehabs get a good turnout, is when you have people buying in the $3million and above range. Then everything becomes high-end. Including the buyers that have more than enough money to reimburse what you have invested. Good luck
Katie,
Good luck on your next investment, your really going to need it !!! I know your probably sick of hearing it but you really did screw this one up. From your "due diligence", to the purchase, to the financing, to the rehab, and now to the sale of the property. Everything was done wrong. I know it's your first deal and that is fine and all but what really scares me is the fact that after reading everyone's comments and MAKING NO MONEY on this deal, you still say you don't know what you could have done differently. Then you actually try to convince yourself you did the right thing by using what some realtors told you as proof. I am not trying to make this a mean post but I have to tell you that maybe Real Estate isn't for you. When I hear someone say that they fixed up an investment home the same way they would have liked it for themselves(regardless of fix up costs) a giant red flag goes up. Especially when that person is sitting on a message board trying to figure out how to get out of their investment that has gone so wrong. If you really have to do this all again I highly suggest you:
1. Negotiate ALOT tougher with the bank or whoever you are dealing with. Don't just do a deal to do a deal.
2. Get real with your inspections. You mean to tell me your going to risk $180k and not inspect a property because someone said you couldn't ??? Think about that for a minute !!! THIS WAS A HUGE MISTAKE.
3. You only said one thing about it but it seems your financing is fairly weak as well. Did you say your loan was for $190K ?
4. How the hell did you spend $75k on your rehab with the materials you said you put in from Lowes ??? (other than the granite) YOU GOT CRUSHED ON THIS ONE.
5. Your agent sounds like a dud. He/she can't sell a home that has been so overly rehabbed (by the way the house looks unreal on the inside) in less than 30 days ??? I bet your paying 6% too ! Pretend your an investor and offer 3-4% if you even need a realtor in your area at all.
Again please understand where I am coming from. I am not trying to post this reply just to make fun of your decisions. I just hope that by reading this you will do ALOT more homework before you take your next shot at this. Maybe it'll save you some money, hell who knows maybe you'll make some money.
I really do wish you good luck.
Katie,
I'm no expert on the MLS in your state, but looking at the link you sent, it shows the status of your property as "option pending". It would seem to me that this means you have a buyer with an option on the property and any prospective home shopper looking on the mls would just pass you over.
Good Luck,
Jeff
How do you END a post? This is getting REALLY old. I do have a buyer. Option period ends in 2 days. Inspections went through just fine. Close on Nov 12. I will clear about $2K-don't spend it all in one place...
I didn't buy everything from Lowe’s. I bought the faucets; plumbing fixtures and kitchen sink there. Read the older posts-the details are there. I did do a 70% LTV (with a little extra) on this property which covered the purchase and the first 40K in repairs. I did pay 6% to RE. She is crediting me back 2K. I do think a Realtor is a good investment; she carries all the liability insurance on the sale. She also found the house. She also held 6 open houses and 2 brokers opens. Did the flyers, newspaper marketing, etc.
This house didn't even HAVE cabinets to begin with or ceilings in 3 rooms, or floors… On paper this project wasn’t that bad. It looked like we could have made 35K. It didn’t work out that way. I got screwed by a contractor that gave me roofing and flooring bid that was 50% of the reality. We made too many “improvements” along the way. But I didn’t really over do it as you say. No one was going to pay 280K in this neighborhood for a kitchen with rustic beams on the ceiling and original cabinets. Investors that have done crap like that are sitting on their houses and will continue to sit for the coming months. Original bathrooms from this era can be great, but my master bath didn’t even have walls-much less tile or plumbing fixtures.
Oh my, I’m sounding awfully defensive. I take ALL your criticisms as part of my education on this property and will put it into good use on the next.
Katie
Katie,
Don't feel too bad. You learned a lot. You broke even. The house is gorgeous, you need to learn to get that look for half the money. Patience also helps, who knows another 30 days might have brought an offer for 10% more.
Mark