Can't win them all.
We sold 2931 Chestnut in Feb 2022 for $975K. A loss of about $34K. We bought for $706K in March 2021. Spent total of $231K on the project. In this post I want to share a few of the things I learned that might be helpful to others like yourself in the future.
Time: The project took 6 months longer than planned - No clear split of responsibility for the first few months of the project. One person took on most of the work and became overwhelmed. - No clear on site operations person. It helps a lot to have a designated "check the site" person, who is compensated for their time. Or hire someone to do it. - No clear owner for each step of the process (e.g. who is running open house for what weeks? are we hiring someone to help us? who is paying the contractor(s)? etc.) - First time flipping for 4 out of 5 partners. If I did it again, I would lean toward having more partners with experience. I would also reduce the number of partners to reduce time to making decisions and make ownership more clear.
Cost: We spent a total of $231K on renovations - $105K General Labor & Materials - $35K Specialized Labor - $40K Interest on Loan - $24K Credit Card Purchases - $7K Holding Costs (Software, Electric, Water, Property Tax) - $20K Closing Fees Main area we could have saved money was by moving quicker and reducing the burn on interest payments. Property Selection: - Built in 1905, tricky in California with electric and earthquake retro. - Rough location, called out by a lot of potential buyers during open house. - Rooms too small for most people.
Inspection - We had an offer under contract for $1.1M. This would have netted us a $159K win instead. But, the inspection report called out a potential retro-grade earthquake issue as a "suggested" fix. This was enough to spook the buyer to back out. Tough. If I had to do this again I would go over the inspection report that was to be presented with buyers with a fine tooth comb and make sure it presented the property in the best light. Or, just not provide an inspection report and let the buyer do their own during their due diligence period. Overall, great experience. Like paying for education. $30K loss split between 5 people, $6K a person. A small bump in the road. Lots of good memories. I'm glad we did it. Felt amazing to finally sell it 🙂 I guess all things come to an end. Keep swinging.