Well, here is a short list of lessons learned dealing with House #2. It isn't as comprehensive as I wanted, but I'm short on time right now to type a novel (haha!). BTW, FWIW, my early calculations - (I'm still waiting on some refunds) - has my pre-tax profit/loss for this house around -$1,800. It should be a couple $100 less after all is said and done, tho.
Drywall
I mentioned before that I now consider myself somewhat of an expert at patching dryall, having to do it several times each over the three areas that required patching. While it adds some experience to my personal portfolio, it was actually a waste of time. I haven't tallied up the amount of time required to find the materials, buy them, cut the drywall, hang it, apply mud, etc., etc., etc., but I'm sure it could be measured in hours. Next time I think I'll just get a handyman to do the work. It MAY cost the same in the end, but at least my time could be spent on other projects.
Carpet
To me, this was one of the biggest issues with this house. I decided to take the cheap way out and I believe this single thing cost me the most in regards to not getting the place sold sooner. What I should have done was replace the carpet after everything else was finished and called it a day. I would have been out about $3k, but I sincerely believe the place would have been sold a LOT sooner.
Subdivision
I really ignored the red flags regarding the neighborhood this property was located. To make matters worse, I decided to concentrate too much on the builder's prices and not the actual prices for resales in the place, and it cost me time as well as money. To begin with, this particular neighborhood was a haven for foreclosures. There were routinely one or two foreclosures on the market each WEEK from this neighborhood, but I instead looked at the newer homes vs. accounting for these foreclosures, too. Therefore, my comps were off by well over $10,000. To make matters worse, the area itself was depreciating in value. When I got the assessment in April, the value went down about $3,000. I won't stop looking in that neighborhood, but I'll definately guage things a LOT better the next time.
Season
I bought this property right at the end of October. By the time I had all the repairs done, it was already mid-November - definately not the right time of year to try to squeeze every penny I could out of a resale. I should have adjusted my list price even more due to the fact that winter was already knocking.
Incentives
Of course, hindsight being 20/20, I think I should have offered some wonderful incentives, like a big screen TV, or brand new washer/dryer, or brand new fridge, or gift certificate to Lowes, or something along those lines to entice more potential Buyers and get the place sold sooner.
Utilities
This was a minor thing, but I should have just left the utilities on the entire time. Once I got someone who wanted the property, I had to run around and get all the utility mess straightened out, which ended up costing me time and money.
List Price
This falls in line with the Subdivision comment, but I should have marketed the house for a cheaper price at the beginning to get it sold sooner. If I would have listed it for what I ended up selling it for, I would have came out ahead instead of being in the red.
Marketing
The jury is still out on how well the flat-fee MLS route will go, but if I did the same with this particular house, it would have saved me a few $1,000's in Seller's agent fees. This alone could have put me in the black.
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5 comments:
Congrats on getting it sold! Those are all good lessons to have learned.. I'm sure you won't be forgetting them anytime soon!
Thanks, Shaun. Especially the carpet one. I'm still beating my head in on that. If I'd have done it all again, I would have spent the extra $1,000's, but would have more than made up for it by getting it sold sooner. Live-n-learn, but this hit the wallet a lot harder than I wanted. :-(
What was wrong with the carpets?,
No need to drown yourself in your beer. -1500 isnt that bad... You would have spent that much at your favorite guru's teleseminar-- buying his products & listening to him tell you that cash flow is whats left over after PITI lol...
Well, I must admit--I learned the most on the deals where I lost money! I second what Starsky said--who needs seminars when you can learn much more by doing!
That being said, I wonder if the House 14 deal kind of shook me up. I haven't been nearly as active ever since. I suppose I should try to get back in the fix-n-flip game more--well, after House 8 is done. It's been over 5 months now, but 'll finish it if it's the last thing I do!!!!! :-D
Starsky - When I bought the house, it was starting to get into the winter months, so the air was cool/cold. There was a slight odor, but not real noticeable. It also "bunched up" in several places throughout the house and really needed restretching - just another indication to me of how cheap the house was built (it was built in 2003). Once the spring arrived, the warm air exacerbated the smell to the point where you could notice it. Even my agent's broker commented on it after taking a client there one day. You're correct about the teleseminar, and that's basically how I'll view this particular deal.
Trisha - Agreed. Even looking over my "lessons learned", I could add probably 20-30 more items to that list - small things for sure, but stuff I'll avoid next time. And I wouldn't worry about your slow down - it sounds like you've had more than enough things on the side to keep you busy AND provide some additional income. I always liked the saying, "Luck favors the prepared mind", and I'm sure it will happen to you here shortly.
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