My First L.A. Rehab Story…
Well folks my first hands-on Los Angeles rehab is finally complete and ready to close escrow in 8 days! It’s been a long, challenging few months, but it has also been a tremendous – and PROFITABLE- learning experience! I definitely took on a big project that would scare a lot of seasoned investors, but I’m fearless like that! Actually it was the solid numbers and great neighborhood that made it easy for me to decide to do this project. Not to mention my pleasure in seeing a house that was about to be condemned by the city transform into a house so pretty that the buyers want to hold their wedding there!
This property had great potential structurally and profit wise. WARNING: You are about to see some serious bragging: A wholesaler we found through craigslist brought this property to our attention. This property was about to be demolished by the city and a $40,000 lien put against it. The seller had inherited the property from her aunt and didn’t want to deal with this. The wholesaler was selling this to us for $165,000, but after looking at the condition of the property we negotiated it down to $110,000, which included a $20,000 wholesale fee. At that time the comparable sales were about $400,000 and we estimated repairs at $85,000. The final numbers: repairs were $150,000 and final sale price $515,000. So what could have been a serious drop in our profit was more than cushioned by the recent “bubble” in the neighborhood. All the partners involved in this project are happy with the outcome and are ready to do some more!
I’ve been asked what lessons I’ve learned from this project. There are so many so I may just create another post about that; however, my biggest lesson was to ALWAYS work by the numbers and not the emotion of the project. Even if we had sold at our original $400,000 estimate we still would have made a nice profit anyway.
How about you? What has been some of your recent accomplishments and/or lessons learned from real estate?