On February 5, 2023, I entered into a verbal agreement to purchase the house and closed on that house on February 24; that’s 19 days. I found this house from a google lead. Therefore, no Realtor was involved. I prefer verbal agreement whenever possible. I am trying to solve people’s problems, not steal their equity. If they change their mind, it’s okay with me.
I pushed for it to happen faster, but the seller was slow in responding to the attorney. It took him over a week to return the seller information sheet needed to get the payoff information.
Funding
I paid $105,000 plus closings for this property. After closing costs and prorated taxes were accounted for, I spent $105,512.52. To fund this purchase, I pulled the money from a home equity line of credit on my personal house. The rate on the credit line is less than 2%.
Approach
This house doesn’t need a lot of work. I expect to spend under $10,000 on the renovation, which means I will pay about $115,000. This house will rent for about $1,500 per month. Therefore the total investment will be less than my 50 times rents rule. As a result, I will be flipping the house. Zillow shows a value of $160,800 for this house, and PropStream values it at $174,006.
My rule for flipping a house is to invest no more than 70% of the after-repair value (ARV). I am slightly above this rule if I use the Zillow value, but I am comfortable under it when using the prop stream value. I checked with my real estate agent, and he thinks it will sell for $190,000.
Next Steps
I have closed, so the next step is to start the renovation.
Update: The renovation begins.
Artifacts
Below is the HUD-1 form from this sale.
