I dont think they buy at auctions now. None of us are successful at auctions anymore. They buy a lot of absentee landlord messes. But their expenses are definitely not reported accurately.
A lot of the houses on their show are in really, really bad neighborhoods. Not all of course! I’ve lost interest in the show because I’m just not interested in the $250k house in a bad neighborhood.
I agree, the homes are pretty terrible and they aren’t special. Bad neighborhoods or bad location on busy street or freeway. But, that’s probably why they get a lot of houses (or at least enough to have TV shows). Quantity over Quality
As nre said, they are probably making $$ off the show, not of the flips, so if the project is in the red, they are still in the green. 
There has to be some fudging of the costs…
Drainage issues can get expensive quickly…and might be hard to fix quickly given the amount of rain we are expecting this year. I think you are being wise to be very, very careful.
Holding good thoughts for you, CB, that the walk through goes well and that this is your next great opportunity! Glad you noticed the slope/erosion issue now so it can be incorporated into your decision making.
CB - hope it goes well today. Fingers crossed!
I’ve had two guys drive by the bottom of the hill to see the eroding slope issue, but neither has given me a rough estimate for the retaining wall work yet. So, at this point I am going to have to fly somewhat blind because I need to make my offer this afternoon. I’m estimating $15k and I hope that I am not too far off
Luckily, I called the contractor who is using my carpenter on a job and begged him to release him for the afternoon so he can come do a full inspection with me.
Did you see inside yet?
Nope… 2pm is the appointment!!
Can’t wait!!
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This home is in the hills of Ocean Beach, between Narragansett and Point Loma Ave. We did the full inspection at 2pm today and here are the major issues with the house:
Slope is eroding and seriously compromising the house. Needs two sets of retaining walls. My revised cost is $18,000
A portion of the house has sloped floors - needs some foundation work but stem walls are in great shape
Need to move kitchen and dining room around
Needs all new windows
Needs landscaping and decks
Original deck was built before the 2 story house was built that blocks most of the view. Need to build a big deck on south side to capture sweeping views. Views are limited to south end of house and north end of house (over alley)
Probably have to add about 450 sq ft master suite addition to bring it up to average size for neighborhood
And here is the biggest issue. When the listing agent talked to me a couple of weeks ago he said “it’s going to be listed about $900k”. Well, today I was informed that the Sellers insisted on listing it at $995k against their agent’s advice. They are convinced that the property is 3 lots, because the original 1890 plot plan has 3 lots drawn in. In reality it is one lot and cannot be subdivided. It is not really 3 lots and is only about 30% larger than similar lots in the neighborhood. Plus, part of that lot is the slope down to the City paper street.
Can’t wait to hear what you decide after you run the numbers and sleep on it. That’s a big variance in what you were expecting cost wise. Good luck:)
Here are the good things about the house:
It has adorable character. There is a large living room jutting out from house that is just begging for big French doors on both sides. Vaulted ceilings with original dark wood beams and fireplace.
All kinds of useable flat space on lot to build covered patios, outdoor living rooms, etc.
Good views that need enhancement with better design
Enough room to build a new kitchen and dining area (kitchen has to be moved further south in the house)
Newer heating system
Newer concrete tile roof (very rare in this neighborhood)
Stem walls and stucco in good condition
Original plaster walls and original character
Very unusual private path to front door - no street out in front of the house
No stairs to get to the house!!! Yes!! Nice single level home
Sounds positive, cb. Except for the price. But if it’s not worth $995, the sellers should quickly realize that, especially if you offer the “correct” price. They may put you off for a while, but other offers won’t come up to what they want either.
Fingers crossed.
CB what would you want to offer so that you could actually make a profit on this house?
At close to $1 million to,buy, it just sounds too pricey!
So, I went to their office and sat with them. I explained that I was surprised by the new asking price. I only have XX dollars. I showed them my comparables in the neighborhood. They will not be able to get a buyer that needs bank loan because a bank appraiser will only appraise the property at about $875k to $880k, based on the comparables. Appraisers don’t care about subjective value of the lot and privacy. In addition, it may be hard to get a loan on the property because it is in horrible condition.
Also, any other buyer that comes in will conduct a full home inspection. As soon as there is a home inspection most buyers will run because of the retaining wall and foundation issues. And, once they have that inspection in hand they have to disclose all issues in the report to any potential buyers.
The daughters have moved their Mom out of the house to Assisted Living. They need income out of the trust to pay for the Assisted Living. I asked the agents to propose that the Sellers carry back a 1st TD at 7% for about 30% of the sale. I feel that this is a win-win for both parties. Since the money is not being disbursed to heirs (who may just want all their cash), the funds go into the trust. The trust could generate a good income to help pay for Assisted Living off of the funds. On my side, I can borrow funds at lower interest than my hard money lenders. I know that Sellers will usually freak out about terms like this but the listing agent will walk them through the benefits of generating income off the funds.
So, I have offered much lower than their asking, and I am still a nervous wreck. This will be the biggest project to date and I am now in the big dollar realm. I have to be careful because it will take longer to sell than any of my other projects. I am aware that there are at least 3 agents in his office hounding the listing agent to let them show the property to their clients.
Someone might pay the high dollar to get the property - it would have to be homeowners that can see past the major issues.
Sounds like a possible, but hold tight and don’t bid too high.
My agent has been scouring for comparables and she is confident that it will fetch 1.2 to 1.3 million fixed up. But, there really are not any good comparables to support that price. The house right behind it on a really small lot was picked up by an investor for $600k but they scraped it and built a 2 story to capture the views. It sold for $1.15 million but it took 50 days to sell about a year ago.
The McMansion built right below on 1/2 the lot size (that blocked a portion of this property’s view) is currently valued at $1.4 million but it has about 800-1,000 more square feet.
Remember, the market for higher end homes tends to be a bit smaller, so holding costs MAY be longer and you have to put that into your calculations.