This discussion was created from comments split from: Flip This House #5.
I’m hijacking this thread, but I closed on my first flip in a long time today. I bought a house and two acres off of a Facebook ad for $18,000, but had to spend an additional $2,000 getting the title confirmed. The house had had a kitchen fire but was structurally sound. I gutted it to the studs, replaced a few boards on the outside, and put on a new roof.
I am guilty of repeatedly spending too much money to make the house look nice. I spent an extra $150 on the front door, for example, to get a fancy oval window. I built a larger-than-absolutely-necessary back deck. I tended to spend a little extra everywhere for a lower-end house, which was made possible because I bought it so cheaply on the front end. At the same time I was also able to use some remnant building materials from other projects for free. For the master bedroom, I decided to go with a shower insert rather than a tub-shower combo (At closing I asked the buyer which he would have preferred, and he said absolutely the shower.) I used a cheap cousin to the Shelf-track system for the master bedroom closet.
Another thing I did to run up costs was in the cabinet department. After I bought the house I purchased a thousand dollars worth of cabinets off of Craigslist. They are nice cabinets, stained in a dark wood color, and of course of odd sizes. When it came time to install cabinets my wife said the house looked so good that using the used cabinets with their ill-fitting measurements and dark coloring would ruin everything. I think she may have been right. So anyway, I purchased new, pre-painted white cabinets from Home Depot.
My wife chose the colors for the house, Behr Colonnade Gray, Stately White, and New Navy. This combo was actually featured on the front of one of Home Depot’s paint books. It looks great, and people in the rural neighborhood stopped to tell my workers how good the house looked.
There is no such thing as a “bidding war” in our area. I listed the house for $89,900 and sold it for about $87,500 maybe two weeks after I listed it, which is a quick sale; maybe I sold too cheaply. I made a little money, but I let my costs get away from me. Also, I suspended work for about eight weeks while my daughter and I went to Europe for part of the summer. That kind of delay slows things down and runs up costs. I haven’t tallied up all my expenses, but my profit is somewhere around $15,000, which is okay, given that I really didn’t spend that much time on the project.
One thing I didn’t know when I bought the property or when I listed it for sale is that it bordered a pond of about four acres, with about a quarter-acre of that pond being on my property. In our state, small frontage on a large pond doesn’t give the right to use the whole pond, but it certainly lends itself to better fishing.
I’m now looking for another house flip, and trying to figure out what to do with a recently purchased warehouse in Iowa. And as luck would have it, after my deal closed today I went to the bank and found it shuttered; they closed four hours early due to a little bit of snow.
Holy cow – you bought a house for $18,000? Around here, that would get you – oh, nothing.
Yeah, same here. You couldn’t get a tiny lot with a burnt down shack on it.
I think this poster lives in a very low cost of living area. He sold the house all flipped for $89,000. Around here…that would buy you a nice three car garage.
Good luck to you, Earl V! It’s wonderful to improve a little piece of the world and make some money in the process. Even better that you could go to Europe and come back to find that all was well with the project. Keep it up!
It’s a regional thing, and then the area within the region, then the submarket and, of course then finding the right deal.
One of my brothers just bought a 3000 sf house in Tennessee for $70,000. The insurance company pegged replacement cost at over $250k.
He’s in Mississippi.
How long from purchase to sale did it take?
CC has anti-thread hijacking bots? 
Sounds about right.
In fact, the later sale prices approaching $100k are a bit higher than some neighboring rural counties of my Mississippi relatives, but within the very upper-end of real estate prices in their area.
Wow…I cannot believe that a) you can find property for sale on Facebook and b) you can get something for only $18,000. It doesn’t really matter where you are, a toilet still costs $100, appliances still cost $x and drywall is still $10/sheet. I guess the huge difference is labor costs.
Sounds like a great project
Just a word about the cost. The lot itself was probably worth $25,000 or more without the house. It’s very difficult to sell a property like this. No broker is really interested in selling a $25,000 house that has had a kitchen fire and is non-habitable. At one time a handy working-class person could get a loan and fix up a house like this, but no longer. Essentially they have to sell it to a cash buyer, which depresses the price and creates an opportunity for someone to fix it up.
The Southern economy is still pretty depressed, and wage and cost levels have always been lower. There are lots of places where nice houses in good neighborhoods can be had for less than $50 a square foot.
The southern economy is sure not depressed in the Nashville area!
We would be lucky to get $100k (before commissions and after some essential repairs) for my dad’s 5 BR, 3 BA, 2400 sq ft house built in 1979 just outside Augusta, GA. (Think original kitchen and bathrooms, significant repairs to walls and ceilings, front steps and deck.) The economy is moribund, despite the military installation there. My sister who lives there has a BA in accounting, 12 years of experience and just got to $11/hr.
Lots of opportunities to buy and renovate, not so many buyers.
In HI, you could not even rent a nice place for a year for $18k–maybe 6 months.
That’s not a good economy. I’d move, if I were her.
The southern economy is not depressed in the Atlanta area - certainly not in the northern suburbs!
The high cost of houses in many areas (SF, NYC, Boston, DC) is because there is no more land to build on. It’s the land that is so valuable and increases the cost of housing. That’s why teardowns go for millions.
Otoh, we just go rid of H’s aunts house in Syracuse we inherited. It’s a smallish colonial (1600 sq.ft) not updated since his grandparents bought it in the early 50’s. We sold as is and did nothing except put new roof on and rip out wall to wall to expose the hardwood floors which had never seen the light of day. We actually had a bidding war and got over ask - lol! But that amounted to only $127k.
VeryHappy – she can’t move. Her H is tied to the area (he is a truck dispatcher making about the same amount she is), but more importantly, she lives in a house my dad has paid for, for which she pays less than market rent, and which she will own after my dad passes. She has a sweet deal.
“The southern economy is not depressed in the Atlanta area - certainly not in the northern suburbs!”
Not in the southern suburbs either … However but not everyone wants to live in the Atlanta area.