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The
idea is not to let your flip, well, flop. But, alas, it does happen.
“Flips that Flopped” is where your fellow rehabbers share their
pain and humbly offer you their advice from the lessons they learned.
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| Carlos
(Chaz) & Yanira Perez, Miami, Florida |
01/15/2006 |
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Yanira: We had just relocated to Miami from
Chicago and did not know the market at all. It was our 2nd rehab here so we
depended greatly on realtors and their knowledge of the “hot
areas”. We had our eye on this particular house in a “hot
area” in Miami. Unfortunately, someone outbid us. However, about a week
later the deal fell through and we jumped on the opportunity. Needless to say,
we were very excited. Our idea was to go in, fix it, and get out in about 1-2
months at most. We got our funds from a hard money lender so we knew we had to
move .
The day came when we put up the FSBO sign and had our first Open House. We were
amazed at how many people stopped by. We counted at least 40! There was no
doubt in our minds this one was going to be breeze. To our surprise, the first
couple that walked in put in an offer. We rejected it, since it was so low. As
the weeks went by many, many people came to see the house but there always
seemed to be one problem: The house did not have a family room! And everyone in
this particular area wanted a family room. The house was too small to add one
so we just hoped someone would come along who didn’t mind having just a
living room.
Furthermore, we held the house for 6 months, paid hard money rates (15%), and
now we had no other alternative than to list it with a realtor. Luckily, the
realtor sold the house in about one month and surprisingly sold it for the
original offer we got on the first open house we had. We were devastated.
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There were valuable lessons we learned from this
experience, though. One, you must do your own due diligence. You cannot go
based on soley a realtor’s opinion. We found that it is worth having your
own system to do your own comparables.
Two, know your market, specifically the population of interested buyers. Since
we were from Chicago, we were not used to family rooms – just living
rooms. We were not aware of the desire people had for them.
Three, always remember not to hold a house too long. If you are not getting
what you want after two months, take what you can and move on. Not only
did we waste time but,
we lost about $30,000!
This was certainly a
very expensive lesson |
but, it was the first and only time it has happened. We definitely walked away
from it learning a “great deal!”
Chaz & Yani Perez
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Editor’s Note
Chaz & Yani have had their share of successful deals, too. Here’s a
look at 2 of their recent ones:
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| Single Family 3/2 in Miami |
| Purchased For: |
$80,000 |
| Rehab& Carrying Costs:
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2,000
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| Sold Price: |
130,000 |
| Profit: |
$48,000
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| Single Family 4/2 Miami |
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| Purchased For: |
$180,000 |
| Rehab& Carrying Costs: |
18,000 |
| Sold Price: |
245,000 |
| Profit:
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$47,000 |
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