I bought a fixer upper at the end of August 2017. It was a pretty quick buy, took less than 2 weeks to close, cash transaction. It had to be cash. Most fixer uppers do not qualify for financing, too risky for banks to give loans. You can do hard money loans, but you won't make as much profit and the closing process takes much longer.
For this property, I plan to flip and sell. This is not my usual business. I usually either:
- buy properties in okay condition, renovate a bit then rent,
- buy fixer uppers, fix, then rent, or
- buy properties in good condition, hold for a while, then sell
However, this time, I want to experiment with flipping, as you can make some good-ass money doing flips. Many real estate investors have made some awesome money flipping houses and sell to make a quick profit. I am trying to follow their footsteps :). But as with anything, quick money does not come easily. There are quite some work to flip houses, which I will describe later. Flipping houses is not as glamorous as you see on tv, such as the Flip or Flop show on HGTV. You will definitely not look all dolled up and pretty like Christina (the female host of the show). There are days I look like a homeless boy (yes a boy! baggy clothes, tennis shoes and sometimes cheap flip flops, and a baseball cap) when meeting up with the contractors.
First, the details of the property
It is a 4 bedroom, 2.5 bath, with 2277 sq ft, 2 stories, 2 living areas, 2 dining areas, galley kitchen, built in 1980, contemporary style, situated in a cul de sac. Being on a cul de sac adds some value to the property.
I like the contemporary style, but totally dislike the front view of the house. Due to the front view, you don't get to see the beauty of the house until you pass through the ridiculously ugly entrance. The main entrance door is on the side of the house, which is where you see the true beauty of the contemporary style. The house has vaulted ceilings, but the front does not showcase that. The front makes the house seem very low and small....and honestly 'ugly'. If I could turn the house 90 degree, or what ever the hell the degree is to have the entrance door be the front of the house, I would not hesitate to do so. The front view is just absolutely ugly!
The neighborhood has lots of trees, which I really like, quiet and has characters. It is located in a good school district. Here are some photos of the exterior:
Condition of the property
The condition of the property is not a complete disaster, but definitely not something you can do a quick renovation. It's one that you need to put some money in to do a complete demolition and remodel. It also need foundation work. That's why it is a fixer upper.
The inside of the house is quite interesting. I call this house the Rainbow House. Every room inside the entire house is different colors. Some of the first floor area has no flooring, it was all cement. I think the previous owners were trying to do some renovations but did not finish. The entire floor of the first floor is not one level, one area is higher than another and one area is lower than another. The kitchen isn't too small but worn down and broken. The bathrooms are all dirty and old. The carpet is pretty gross.
The owners left most of the things that they don't need so the place is quite messy. But all and all, the property is not as bad as some other houses that I've seen. There are houses that you cannot imagine that people actually live there. Some houses, the smell is absolutely horrendous that I could not step inside for even one second. However, the houses that are in the worst conditions are those houses that you can make great profits on. Here are some photos of the interior:
I will add photos of the 2nd floor in my next article, part 2 (stay tuned...).
Renovations for this property
There's quite some work that I am doing to this property, from the exterior to the interior to demoing, we are doing it all!
Starting with the exterior:
- Fix the foundation (add 16 new piers)
- Power wash the entire house
- Spot primer and one coat of paint with two tone color for the entire exterior (shades of gray of course, my favorite color)
- Fix and level wood fence and fresh new coat of stain for existing wood fence
- Replace all siding with hardie boards
- Replace all rotten fascia boards and trim
- Demo part of the ugly entrance brick arch in order to make the house look vaulted like it should be
- Remove back pergola and build new opening
- Remove gate and iron board from windows
- Create a new window for the front view of the house (a maybe)
- Shed - Install new 1 x 4 around the bottom part, fresh new coat of paint
- New landscape
Now to the interior:
- Demo and remove existing first floor plan from wet bar, half bath, laundry, kitchen
- Re-locate half bath, laundry, kitchen and build new open concept floor plan for first floor so that you see every room everywhere you stand (needed an engineer to review)
- Remove part of the existing shelving from garage, build a new storage for existing water heater, raise 18" from the ground, add new drip pan, tape & bed, prime and paint
- Demo and remove concrete slab from living area to level all existing flooring
- Remove all existing wood floors, carpet, and vinyl flooring
- Level sub floor in front of fireplace prior to install new floors
- Demo part of the fireplace and re-tile
- Re-configure the stairway so that it is a floating stairway
- Knock down the upstairs wall where the stairs is situated to make it open
- Remove all existing doors to be replace with a six panel doors
- Remove all fur-downs from all bedrooms
- Build a new wall for one bedroom
- Demo master bathroom and create a new floor plan to include a standing shower and a freestanding bathtub
- Demo and remove existing counter with vanity, all existing plumbing, shower tile, toilet, all existing fixtures, flooring
- Remove all popcorn ceiling, float, tape & bed, texture, prime and paint
- Float all existing texture from walls, apply new texture, prime and paint
- Install new flooring all throughout the house (no carpet)
- Build new kitchen cabinets for new kitchen layout, apply a fresh new coat of paint once installed (oil base finish)
- Build a big kitchen island with cabinets on both sides of island and install granite countertop for kitchen and bathrooms
- Add built-in microwave and oven, add vent hood
- Re-locate the kitchen window to go with the new kitchen floor plan
- Re-locate the entrance to the backyard
- Upstairs hall bath will have new vanity, new shower tile, new bathtub, new fixtures, new flooring, new toilet, new granite counter
What are the numbers?
Here is the breakdown:
- Listed price: $195000
- Offered price: $180000
- Accepted price: $180000
- Closing cost: $537 (what a great number, right? This is the difference between closing cost for a cash transaction as opposed to a finance transaction!)
- Overall budget: $78000+ (this is the budget including renovation budget, expenses such as insurance, electricity, agent fee (I swore I will get my realtor license one day!), etc.)
- Budget for renovation: $40000 - $50000
- Expected profit: $35000 - $40000
Next Article, Part 2
To keep the article from getting too long as there will be more photos added as the progress of the renovation continues, I am splitting the article into several parts. In part 2, I will disclose what it takes to flip a house, the expenses, the headaches, photos of the second floor. If part 2 article is not too long, I will add some photos of the progress of the renovation.
Articles you might be interested in reading:
- I Purchased My First Investment Property In Cash In My 20s! – Part 1
- How I Turned My First Real Estate Investment Property Into My Best Investment In My 20s – Part 2
- Disaster to Desirably Decent – Another Home Renovation
- How I Turned A Decent Closed Floor Plan Property Into A Beautiful Open Floor Plan And Rent Out In 1 Day
- Transform a Boring Condo Into a Modern Condo and Maximize Rent Income
Thanks for reading and stay tuned for my next articles! 🙂 Have a good one!
Disclaimer: All content is the opinion and experience of the author and should not be construed as advice. Make sure you do your due diligence before taking on any project.
Hey, Welcome! I am Thuy. I learned how to live frugally and saved money during my early 20s and purchased my first investment property in cash. I also invest in stocks, ETFs and Mutual Funds.