Hoping it all went smoothly and you received the payment today!
Hooray!
The title company did record the Grant Deed yesterday (Friday), but we didn’t get confirmation until 5:30pm which means that there was no flurry of calculations trying to get my money disbursed 
Final costs and wire of disbursement will not be until Monday.
I have to wait until I see that final tally of costs because I have two types of loans on this project; private lender loans that were recorded with 1st Trust Deed (mortgage/lien) against the property and private lender loans that were unsecured and need to get paid back outside of escrow.
The loans that were secured (recorded at County Recorder office against the property), are paid from escrow by the Title Company. Similar to if you had a mortgage that was paid off in the sale transaction. Noone seems to be able to answer the critical question… does the loan interest accrue to date of recording the ownership change??? or does the loan interest accrue to the date that you guys finally get around to cutting a check for payoff?? Or even worse… does the loan interest accrue for a couple days after payoff if you are mailing a check off to someone?
And, I have to pay off the other private loans but I need to have money in the bank to hand over a payoff check!
So, everything will linger until Monday when I can do my final calculations.
Either way, this will be my largest profit to date, but that has to be balanced against this took the longest time ever! I would hate to try to divide it by number of hours worked, it might be very embarrassing. Probably could go over to McDonald’s and make more money by the hour 
Do you have a figure how many hours YOU have worked?
I’m so happy it has all gone through. You did a wonderful job in giving that house new life. I could never have seen past the condition it was in! Are you having a break before the next project or are you on the look out already?
The answer to your loan question is almost certainly “whatever makes the lender the most money.”
You and the buyer are most likely both paying interest right now.
Yes, the buyer is paying interest as of Friday morning when the bank ‘funded’ the loan. But, they also took ownership on the same day, so at least they have possession of a house. Ironically, they are not coming out to San Diego until about May 2nd, so the home will sit empty for 2 weeks. This leaves us all in a dilemma because someone needs to go over there and water the newly transplanted landscape. Even though the new plants are drought tolerant, they need to be deeply watered for a couple of months to take root. Plus, there are potted plants in the courtyard that are very difficult to keep alive.
I’m the loser in the equation… still paying interest across the weekend without having any means to pay off the loans.
I have sent a verbal proposal (through my agent) that they can pay one of my guys about $40 or $50 dollars to stop by once a week and deep water and they need to pull a lot of weeds or spray some Round Up. Also, we need to pull the potted plants out of the courtyard and put them somewhere where they can get watered with the hose.
Regarding time frame… I locked in my funds with the offer on this property about August 14, 2014. So, it has been a solid 8 months on this project to closing date. That is about 3 more months than I have ever spent on a project.
Let’s call it 32 weeks. I did not work on the project specifically for about 4 of those weeks, net 28 weeks. Just as a rough calculation, I’ll call it 5 days/week (although I usually spend a full long 6 days a week on every project). That’s 140 days, but probably more like 160 days.
Equals about 1,120 hours, but closer to like 1,300 because I never work just 8 hrs, always working late on logging receipts and expenses and ordering stuff, designing layouts and making lists.
Lets say you made 300K net of everything, for 1300 hours, your hourly rate is $230/hr, not bad returns.
If you also add lets say 200 hours to buy this property, You still made $200/hour, better than flipping hamburgers…
SALE NEGOTIATION
Now that we have closed escrow and the sale price will be public very soon, I can reveal how the negotiations went on this property.
Original Asking price was a range of $899,000 to $925,000. Remember… I thought my agent was crazy.
After one week went by and we did not have any offers, I was really worried. In reality, the universe of pent up buyers will come through the house that first week and you should have an offer. If you are lingering past 10-15 days, you have gone through the realm of true buyers that are looking and now you are waiting for ‘new buyers’ coming into the market. My agent’s phone wasn’t ringing off the hook. We had some challenges with the property such as the entry stairs… otherwise we would have sold really quick.
The Chicago buyers had come through the house twice at that point but I really did not know whether they were going to make an offer or not. So, I asked her to change listing to an asking price of $899,000. This was my dream number and I wanted to see if we could get that, really wasn’t holding out for that $925,000.
Of course, about 24 hours after changing that listing price, the Chicago buyers made their offer. When they first came to the house and I saw them on the street, I gave them a flyer and encouraged them to call the listing agent letting them know that there would be a commission savings if they went through my agent. Being from Chicago, I think they assumed that commission was 6% and half of that would be a 3% savings.
Original Offer was $872,000 which, miraculously, was exactly 3% off asking price.
I countered back at $890,000 with an explanation that my actual commission savings was really only 1% and I was willing to give them the entire commission savings off the asking price. I also threw in the white outdoor dining set (my cost $600 that I purchased because I felt it was really important to stage the courtyard nicely) and my agent threw in the turquoise easy chair in the front entry (her cost $300) because we knew they didn’t have any furniture and these two things were really just going to be a pain in the butt to try to store somewhere.
They countered back at $886,000. I wanted to ‘think about it’ for a little bit, but my agent sweetened the pot by offering another $2,000 in commission savings. And, they offered a 21 day sale which was worth 1 week carrying cost savings to me. SOLD!
So, the bottom line is that we sold for $886,000 but I realized a $11,000 commission savings which would have come straight off the sale if sold through another buying agent. The value to me of this offer was $897,000 which is only $2k off my dream sale price!!!
I really didn’t realize the one week savings in carrying costs, it ended up costing me 2 weeks more in carrying costs. But, there hasn’t been anyone beating down the door to buy this property so everything worked out the best it could. My agent is picking up the cost for the foundation repair which was another $1,800 savings for me.
ACTUAL SALE PRICE = $886,000
VALUE TO ME = $897,000
It all worked out nicely!
I forgot to mention that my agent got involved and made sure that I won my battle with the Title Insurance Company. They are going to refund the difference of $197 to me outside of escrow. Not holding my breath, I’ll probably never really see the money.
Yes $300k would be wonderful, but I didn’t get close to that. It may look like that on TV and on paper, but its not the reality
Officially “Sold” - congratulations!
From what I remember of the purchase price and the costs along the way, on a per-hour basis you are going to come in at well over $100/hour, and that ain’t bad.
Certainly beats flipping burgers at McDonald’s.
What is your goal? Will this project be more or less profitable than your others on a per-hour basis?
I have never really tracked ‘per hour’ on each project. I’m going to guess that the largest ‘per hour’ was a downtown condo that I bought at foreclosure auction. One day I sent a list of properties going to auction to my agent and she immediately got back to me and said ‘You have got to buy Condo X downtown’!!! I have buyers that have been looking in that exact same building for over a year and I can sell it immediately - don’t have to go onto the market. Also, she was very smart about the configuration of the buildings and she knew that Nbr Y in the building was a corner unit with sweeping bay views. Not many people would have known which exact unit in the floor plan was the corner unit.
So, I fought hard at the auction and beat out one of the regular big boys - he thought that I was nuts with the price I paid and came up to me after the sale and asked “Are you buying that for yourself? Do you know what you are going to sell that for?” Most of the time these guys think that I am Suzy Homemaker buying something for my family at auction. They are such numnuts they pretend that I don’t exist standing there every day (or at least I used to stand there everyday… haven’t been to the auction for about 9 months now)
It was occupied by a woman renter who tried to pretend that she had no idea the place was going into foreclosure (whole other story), but she moved out in two weeks. A little paint and some new flooring and it was sold to a retiring couple in Kansas without ever going to market. I realized a $85,000 profit after holding for only 5 - 6 weeks waiting for their loan to close. And, I didn’t have to do any major renovation. That would be the sweetest per hour rate of them all.
Patiently (well, really not very patient at this point) waiting for Title Company and Escrow to ‘finalize’ stuff so that my proceeds can get wired. As soon as I see that final number and crunch some stuff I will post the big reveal.
Meanwhile, went to an Open House of a trust sale property in poor condition yesterday. Spent some time talking to the listing agent who lives on the street. Going back today to do a thorough inspection with my carpenter and I’m going to be making the strongest offer I can this afternoon.
Smooth sailing, cb! Fingers crossed.
Can’t wait to see Flip This House 4!
Good luck, Coralbrook!