<p>Very interesting post, OP. Would like to hear how the story unfolds. Thanks.</p>
<p>coralbrook:</p>
<p>What you’re doing is very interesting to me. I look forward to seeing your progress. The San Diego area will always be a desirable area IMO so there’s lots of potential.</p>
<p>I hope you do well on this.</p>
<p>Good morning everyone. I am actually on a pre-planned family vacation right now on Kauai. Something you should Never do right after purchasing a flip with huge issues. But I have a loyal crew that I trust while I an gone.</p>
<p>Here’s how it played out.</p>
<h1>1 this house is in the Altadena part of North Park for those who are familiar with San Diego. One of the hottest neighborhoods in downtown. To even make an offer to the heirs you had to “qualify” as a professional and guarantee that you would fix up to code because the City had assessments for neglect on the property. At first the Listing Agent didn’t believe me (a woman thing probably) but I was able to get qualified.</h1>
<p>They received 25 cash offers and heirs were picking top 5 before they would even allow anyone to come inf for detailed inspections. They received offers in the $460-475k range. My offer was at $401k. In</p>
<p>Sorry, have to do several posts because I’m on a Kindle.</p>
<p>Listing agent kept pressuring me to raise my offer. I couldn’t budge because I estimated $90k in work and I could see the market softening and I needed to be careful, wanted to be conservative with future value of $525k. I was not selected as finalist and they went with the $460k offer. Interestingly, they called me up a week later and said their first buyer had backed out (gee, I wonder why!!) And I could have it for $455k if I wanted it. I stuck to my original offer.</p>
<h1>2 Since I was able to do a thorough inspection of this house I estimated my repairs at $75,000 and a recent comp sold for $430k in slightly less desireable location. But it is very difficult to comp the neighborhood because there has been no inventory and it is a small pocket of historical homes. It’s in La Mesa Village. I used $425k as my target because of the low inventory and my listing will be in excellent condition.</h1>
<p>The owner’s granddaughter was the listing agent (first listing newbie). I made my offer of $285k directly to her to try to get an advantage if no buyer commission paid. Because they listed way too high they did not get a frenzy of offers. There were about 5 offers with a $325k high. They chose that offer and then she called me up 3 days later and said the buyer cancelled and would I meet their offer to get the house? No, but I’ll go to $290k and close in 5 days. She knew that I was one of the few that had thoroughly inspected the house so she convinced her grandparents to accept my offer. She did get another offer at $300k while we were negotiating but I made her stick to our verbal agreement.</p>
<p>So, as you can see… its all about negotiation and making</p>
<p>Making the best terms for what the Seller wants. They needed money fast and they needed to get away from the liability of the vacant house.</p>
<p>I cannot post or link to pictures due to CC rules so it is hard for you guys to see how utterly terrible this house is. But I have to make a living for my family and I just had to take what I could get because it had been 2 1/2 months with no income.</p>
<p>Oh, wow! So interesting! It’s mind boggling that #1 was listed at $359,000 but ended up causing a bidding war. That’s the one I thought had the most potential, but I was hoping you could get it for less, so you can see what I know about the process.</p>
<p>You sound like you really know what you are doing. Thanks for sharing your process with us.</p>
<p>So I guess you will be getting to work as soon as you return from vacation?</p>
<p>Just another thought for you all. I know that you see the TV shows where they make $100k on the flips. First, they aren’t telling the whole story with all the buyingandcarrying and selling costs. Also, this business is a law of averages. The more properties you can do the more you can risk having some losses in the mix. Unfortunately because I am just one person scrambling without the benefit if a big team out looking for properties I have to try to be more careful and I lose many bidding wars out of fear. Also, I can only do one project at a time because I don’t have big pockets or outside investors.</p>
<p>My business plan is to shoot for 10% profit on my original investment. However, things have become so competitive that I hope for 7.5% now.</p>
<p>Out of 15 flips my results are:</p>
<p>4 home runs
8 at plan
2 below plan</p>
<p>1 loss (about 2% loss)
1</p>
<p>We’ve already demolished and thrashed out. We are on the third huge dumpster. Tore out back fence so we could back the dumpsters right into back yard.</p>
<p>We have engineered the ceiling rafters and are raising the ceilings while I am gone. Time is money and it can’t wait until I return. It’s just a crappy part if this NOT glamorous job, no such thing as a vacation</p>
<p>Sorry, meant thrashed out.</p>
<p>I will continue in the near future with our detailed scope of work and progress.</p>
<p>Uggh, this Kindle is killing me - trash out</p>
<p>I know there are CC rules against linking stuff, but they’re typically fairly lenient on some things like this. You could always PM a moderator and see if they’d allow it for this thread (since you’re obviously not someone just coming here to generate traffic for a competing website).</p>
<p>I received a PM from Moderator reminding me that I cannot link to photos or outside service.</p>
<p>Looking forward to following you on this flip.</p>
<p>Bummer on the photos.</p>
<p>What an interesting thread! Coralbrook, I have a question for you…when you buy a house full of “stuff” do you make any attempt to sell the things, or do the contents go straight into the dumpster?</p>
<p>There are three possible scenarios regarding the stuff:</p>
<p>1) purchase house from sellers with regular real estate transaction (this flip). Anything left in house is fair game. Usually it is disgusting trash left over and goes into the dumpster, nothing of any value. Although in my last purchase the Sellers left a huge safe in the garage because it was impossible to move. I tried to turn it into a selling point for new buyers although I have no idea how anyone would get it out if the garage in the future.</p>
<p>2) A purchase at foreclosure auction where the house is vacant and abandoned. This is where you experience the most trash and interesting things. By law you have to post notice for 18 days with an inventory if items if rue value appears to be greater than $300. There are a lot of crazy things that can happen in these types of situations where squatters, relatives or crazies claim they are still "living " there even though the utilities are off, etc. I have never had a bad experience but there are crazy stories out there. </p>
<p>I move everything into garage and change the locks on the house. After 18 days we keep anything of value, usually the workers want some of the stuff. Have never had a garage sale because I don’t want to draw attention to an empty house.</p>
<p>3) Owners (or renters) are still living in the house purchased at foreclosure auction. This is the hardest situation because I want to be as understanding and kind as possible. I will negotiate a “Cash for Keys” which gives them money to move to a new home. Owners only have 3 days before eviction and I explain that a legal eviction will hurt them in the future and I would rather give them the money than a lawyer.</p>
<p>In this situation we sign an agreement with a deadline and it states that any personal property remaining in the house is abandoned.</p>
<p>That’s so interesting! I would guess that in a hoarder’s house almost everything would have to be thrown away and burned, but I wondered if anything was salvageable. When a distant relative died, her children put the house (in a very desirable neighborhood) on the market with the understanding that it was a teardown. They pitched most of her possessions into a dumpster- it was kind of sad. But every morning they would come back to find the dumpster almost empty! Neighborhood scavengers went through it during the night!</p>
<p>The house I just bought had hoarders in it, but Seller cleared most of it out except the collapsed garage. You can just tell there used to be hoarders in there by the gunk and mold on the walls, meaning they had stuff piled so tight there wasn’t any ventilation. The house I did not buy still had the 5ft high solid pile of food waste and trash in it. Sellers never cleared it out.</p>
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<p>Haha, carolbrook, I specialize in the fourth scenario which you have not mentioned. That is, Buy SFR or condos in Auction(not on steps) for occupied homes where it is already REOed.</p>
<p>Now you say, why in the world the Bank spend time to take title in the home and did not evict the occupant and sell it in auction? Well, this is the worst scenario of all in flipping houses. The banks are not dummy and they sell it without evict the occupant because they know they will have problems to do that. They sell it at way below the market so they can pass the hot potato to become some one else’s problem.</p>
<p>In one case, the house I bought was occupied by four mentally challenged person, ie lunatics. Believe me, if I took them to court with UD, I will still not be able to gain possession, year and half later. I worked at that project every day for 4 months and finally I was able to move everyone out of the house and flip it with 40% profit. </p>
<p>In another case, the bank knew the first floor ceiling is only 6’ 8" and cannot be legally occupied in today’s code requirement. It took me three months to dig and fight with city hall to get a CO for the first floor WITHOUT raise the ceiling height, saving me $80,000.</p>
<p>Those are value added services I work with on home flipping.</p>
<p>Came for the “Chance Me” threads and stayed for the House Flipping Adventure! Excellent read…</p>