<p>I’m starting a new thread to follow along on the search (and hopefully, renovation) of the second CC flip house.</p>
<p>I’m going to describe how many offers, inspections and due diligence you have to go through to try to buy a property at the right price in order to renovate and sell (flip).</p>
<p>I have researched the market as best I can and decided that I need to move my buying power up higher because I am going to target the down-sizing, retiring buyers who are looking for something special, single level. We’re trying to target future sale price of about $600,000-$800,000. Moving up to this price level will reduce my competition a little bit, less investors trying to buy in this range.</p>
<p>In order to increase my buying power I have secured access to a private party hard money loan (no collateral needed). If I need to tap into the extra funds it will cost me 1 point (1%) and 12% annual interest rate. This is lower costs than my competition pays so I am grateful for access to the funds.</p>
<p>So, now I am out shopping for distressed properties in the price range of $450,000 to $600,000.</p>
<p>House #1
Home in below average condition, two story, large master addition on 2nd floor, huge views south off Mt Helix. Bonus room and half bath in lower basement type area (not really a basement because it has full windows and walk out on one side). This was owned by a landlord next door from my previous house. Asking $525,000 on MLS but he offered to sell to me for less without commission and he offered to let me assume/wrap his 1st loan of $230,000 at a good interest rate.</p>
<p>I offered $475,000 because my estimate was $75,000 in renovation costs and I feel the house might sell for about $615,000. He came back verbally at $495,000 but I just couldn’t eat the $20k difference so we stopped negotiating. He took it off the market and says he is going to renovate himself and sell. His progress is going very slow on the renovations and he is going to have to pull City permits to get natural gas onto the property. I drive by every now and then to see if he has stalled - maybe I can call back at the right moment.</p>
<p>House #2
There is a terrible condition house in same area, more desireable location but only minor mountain views, not sweeping views. On the northern side of Mt Helix. This one is being sold by family after a hoarder was living in it, poor condition. Only has 2 bedrooms and one bath upstairs and terrible dark/windowless bedrooms in the basement area below with a makeshift condition where a caretaker was living. This one really doesn’t qualify for my target audience (retirees) because the garage is on the lower floor and you have to go up stairs to get the main floor.</p>
<p>The roof is some kind of horrible bright red fiberglass crap and needs to be replaced (along with everything else). I would need to add a full bathroom and walk in closet to the master bedroom upstairs. </p>
<p>One of the heirs is a real estate Broker who doesn’t think there is really anything wrong with the house. I’m guessing they are not from the immediate area. I made an offer at $445,000 because it needs a lot of work. My estimate is $615,000 all fixed up. They came back at $505,000 and wouldn’t budge on their price.</p>
<p>House #3
A mid-century home in a beautiful neighborhood, Point Loma, with views from the deck to San Diego harbor and Coronado Islands. Slightly below average condition but there is a bedroom on each floor. Needs full renovation of kitchen and baths. For some reason, the master bedroom addition on 2nd story has the bathroom and closet on the view side of the house with windows out to the street. What were they thinking? I would have to reverse everything in the master bedroom at a large cost. </p>
<p>Even though I went straight to the listing agent (so they could get double commission) and she worked with me, there was a regular conventional loan offer that was $35,000 over my offer. Had to let this one go.</p>
<p>House #4
Home in Mt Helix area with an acre of land, no view. Terrible condition. There were multiple offers on this one so I didn’t bother making an offer even though I spent 3 hours in the house inspecting everything.</p>
<p>Auction Condo #5
Went to auction and tried to get a 1998 condo in the downtown area that had gorgeous views, but just from the living room. It is occupied and there is a huge IRS lien on the property. IRS liens are tricky because, even though the property is foreclosed by the bank, the IRS has 120 days to redeem the property if they want. However, the IRS never comes around trying to redeem the property in these days so you have to wait the 120 days before you can sell to a buyer in order to get title insurance.</p>
<p>Outbid by $50,000 at the auction. I don’t know what the other bidder was thinking.</p>
These would not be legal bedrooms in my state, which requires windows of a certain size so that firefighters can get into the room from outside. Otherwise these are basically a deathtrap.</p>
<p>Your target buyer who is approaching retirement age would prefer to have everything on one level. There could be secondary bedrooms on a second floor or basement level for visitors but the master bed and bath need to be on the same floor as the kitchen and living spaces. Look into ADA recommendations when renovating as well. Buyers may not be handicapped now but there are many things that make life easier as we age. The views are useless if the house is not functional.</p>
<p>Would you be making the bathrooms accessible?</p>
<p>I am thinking of remodeling my downstairs bathroom with ADA recommendations in mind, in case any of our older parents needs it temporarily or permanently, or for my husband or myself.</p>
<p>This may mean widening the bathroom door in addition to grab bars, maneuvering space, and more.</p>
<p>That may not make sense for you, I am curious though.</p>
<p>Very interesting about the ADA Compliant. I hadn’t thought that far ahead, but I am definitely focused on making sure the master bedroom is on the same floor as the living areas. And, ideally, accessed directly from the garage. If I have to build a new master bathroom I will definitely make sure that he doors are wide for wheelchair/walker access and make sure the bathroom is easy to use. </p>
<p>I need to think about whether to install the grab bars in the shower or not. They are very visible and would turn some buyers off. They can always be installed by buyers later if they need them.</p>
<p>Windowless Bedrooms - well, they had these dinky little windows but the rooms were in the back area of the basement and that just is not common in our area. I don’t think the windows were legal size for egress. I’m guessing they were calling the main room downstairs (no closets) as the ‘bedroom’. But it was obvious they had walled off horrid little bedrooms down there.</p>
<p>This is exactly what I was thinking as I read the descriptions.</p>
<p>Re the bathroom and ADA compliance, I think that making everything ADA compliant short of installing grab bars is an excellent idea. You might want to look into the regulations for the other parts of the house too, just to see if it is feasible.</p>
<p>ADA compliant is very important in commercial properties should not be important in residential flipping because you just cannot target your next buyer group to retirees unless it is a 55 or older community. After I bought my current residence I had some thoughts to renovate the first floor full bath to an ADA compliant bathroom but I didn’t because it will cost too much.</p>
<p>I’d be very interested to know that house with one acres of land whether it can be expanded or build a second or third house on the lot. No wonder they get multiple offers.</p>
<p>The house with one acre of land can be divided into two lots. The existing house and driveway is configured so that we could definitely split out a 2nd lot - the lot is completely flat and there already is a street access drive on the other half. However, I researched it and it takes about $30,000 to $40,000 to do all the surveys and engineering. Takes minimum 18 months to get a legal parcel split recorded and ready to go. So it would be a year and a half before I could have sold either the original house/lot and the 2nd lot and vacant land just does not sell as quickly as I need it to sell.</p>
<p>Not going to go full ADA compliant, just widen doorways where possible and make sure the living areas, garage and master bedroom are on a single floor without too many stairs to get into the main floor. Most houses around here there will always be a couple of steps to get from garage to main floor because the garage is on a slab and the house is raised foundation.</p>
<p>Unless there is a 10x10 100sf or larger master bath on the first floor, to make it some what ADA compliant is possible. My 5x9 bath on the first floor cannot even accommodate walker access, let alone wheel chair access. The bathtub alone took too much space. </p>
<p>I guess nowadays, ADA compliant and “Green” construction are “in”, that is progress.</p>
<p>Yes, subdivision costs money and time, as I an getting close to “closing” on my property for sale, I can feel that, I waited too long just for my money, let alone to wait for two or more years until my vacant lot is sub-divided and built out.</p>
<p>Go measure your bedroom windows and see if it is compliant.</p>
<p>The reason for an Egress Window is not for the fire fighter to get in, rather for some one inside to get out in case of a fire. </p>
<p>I was able to enlarge one of my bedroom windows to add an legal Bedroom for less than $500, that was the cheapest investment for me. It is a huge upgrade from a legal one bedroom apartment to a legal two bedrooms apartment.</p>
<p>^^ CB then you should come here to buy this one.</p>
<p>Old lady died in this house. Asking on MLS for 499K, view the house, it is in VERY Good condition, except everything is dated. Termite report $8000 repair section 1. Expected repairs houses in this area, $5000 re-piping for galvanized, cast iron sewer replaced for $2000. Kitchen and bath tile counters and cabinets, floor, painting inside and out… and you are done.</p>
<p>Its one block from my other house I am keeping and one of the same house behind this was sold for $615K last year in Aug. I looked at that sold house as well, it was less dated, but not by very much pipe and sewer were old as well.</p>
<p>Few things prevented me buying this</p>
<ol>
<li>too close to my house</li>
<li>bidding wars</li>
<li>cool down in local market</li>
<li>I don’t have that much cash</li>
</ol>
<p>I looked at three more houses today, #6, #7 and #8. First two ruled out immediately because they were not desireable.</p>
<p>Just made an offer on #8 that is $50k less than asking price. I made the offer through the listing agent so that should save Seller about $10-15k and I don’t need termite clearance which should save another $4k. This house has everything on same level with a guest apartment/granny flat downstairs that could be used for a caretaker. House d</p>