Fred Griffin: The Fixer Upper we are Buying, and the Potential Profit When we Sell It

The Fixer Upper we are Buying, and the Potential Profit When we Sell It

     My family is buying this banged-up charming 65 year old house.  We will renovate and rehab the house - not just a "spackle and paint" job, but a stabilized foundation, new interior walls, new wiring, new plumbing, new HVAC, new exterior siding, the works.

Fixer Upper House - Front View

 

      First, please understand that we have considerable experience; we have done these before. 

 

     Newbies and amateurs can get killed taking on projects like this.  Be careful before embarking on such an adventure!

 

 

Fixer Upper - Kitchen and Kitchen Floor

 

 

     During the Boom in 2005, we did a house just down the street from this one.  Purchase price on that was $25,000.  We spent approximately $40,000 bringing it into shape - plus the labor of my brother, who is a Licensed Building Contractor.  Sales price was $190,000. 

 

Fixer Upper - Bathroom

 

     We find recent sales for comparable 2/2's in this neighborhood at $129,000 and $130,000.   That's $60K less than our 2005 deal, but we can still net a healthy profit on this house.

 

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Purchase price is $21,000. 

 

It will cost another $40,000 to bring it to Code and make it attractive to Buyers.

 

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     Pros:

 

      Large lot.

 

     In-Town location, "trendy neighborhood", desirable school zones, short distance to shopping.  

 

     This house has #1 grade Oak Hardwood Flooring 

 

Fixer Upper - Oak Floors

 

 

     Massive Trees, including a huge Cedar, 2 Live Oaks, and one very large Short-Leaf Pine.

 

     The structure is good.  

 

     The Price is right. 

 

     Somebody removed the Asbestos Siding that had been tacked over the original siding; that person backed out of their Contract.  Expensive removal permits, and even more expensive environmental and disposal fees, have already been covered.   The asbestos is gone.

 

Fixer Upper - Siding Prepped, Asbestos Gone

 

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     Cons:

 

       The house will have to be jacked up and leveled off.  The pillars, joists, metal caps, etc. appear to be okay, but we have to get this thing completely perfectly level.

 

    The interior walls will have to be moved and re-done (new studs drywall, insulation).

 

       The floor plan will have to be redone - it was a 700 square foot house, with another 250 feet of porches under original roof that have been enclosed.   Adjustments and corrections are in order.

 

       The walls are true plaster.  Years of bumps, dents, picture hooks, etc. have totally defaced them.  We will need to cover that plaster with something; it cannot simply be spackled and painted over.

 

     The wiring is a joke (check out the breaker panel, which probably replaced a screw-in fuse box at some point back in time).

 

Fixer Upper - Circuit Breaker Panel

 

 

       The plumbing is woefully obsolete.  And, there is only 1 bathroom; we have to add a second.

 

 

     There is some termite damage in the living room floor, but it is minimal.  (The greater damage is some numpty who had it under contract subject to inspections; they ripped out a chunk of the wall looking for more termites).

 

Fixer Upper House - Termite Issues

 

    The existing Air Conditioning unit is an antique.  Somebody ran home-made ductwork under the house; it fell off the hangers and is on the ground.  So a new HVAC including duct work is mandated.

 

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     The Numbers:

 

       Purchase Price     = $21,000

       Renovation Costs = $40,000

       Projected Sales Price     = $130,000

 

       Estimated Net Profit =  $65,000 to $70,000

 

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Frederick Griffin, Licensed Florida Real Estate Broker    850-545-1901

 

Tallahassee Florida Metropolitan Area

Exclusive Representation for Buyers and Sellers 

Call Fred  850-545-1901

 

 Realtor logo       HUD Logo Fair Housing

 

 

 

Frederick Griffin, Licensed Florida Real Estate Broker    850-545-1901

 

Disclaimer:  Nothing in the above blog article is to be construed as legal advice, tax advice, or financial advice.  For legal advice see an attorney.   For tax advice or financial advice see a tax attorney, certified public accountant, or other qualified professional.

 

Comment balloon 8 commentsFred Griffin • February 26 2012 09:32PM

Comments

In order to handle the fix on fixer uppers you have to know how to fix.  Some are not worth it.  Others are  bargins.

Posted by Tim Lorenz, 949 874-2247 (TIM LORENZ - Elite Home Sales Team) almost 7 years ago

Sounds like you've got a solid plan and team in place.

Posted by Michelle Carr-Crowe Just Call 408-252-8900 Top 1%!, Family Helping Families Buy & Sell Homes 40+ Years (Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty) almost 7 years ago

FYI, I subscribed to your blog & look forward to reading more from you. You can visit mine at www.activerain.com/results. 

Posted by Michelle Carr-Crowe Just Call 408-252-8900 Top 1%!, Family Helping Families Buy & Sell Homes 40+ Years (Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty) almost 7 years ago

Fred years ago I did the same thing.  I did most of the work myself which brought good profit.  If I the time now I'd probably take on another one.  Debbie and I have actually talked about it but for now we dont' seem to have enough time in the day for another project.  Let us know when you sale this one and don't forget to show up the during and after photos!  A video project? 

Posted by John McCormack, CRS, Honesty, Integrity, Results, Experienced. HIRE Me! (Albuquerque Homes Realty) almost 7 years ago

Tim,  the first time we did one of these (maybe 20 years ago), we realized after the purchase that the house was a Total Tear-Down!  We had paid for a very expensive lot. 

 

Michelle, thank you.

 

John, my brother will provide most of the work (and take the larger percentage of the profit).   He will do some of the work himself; he has access to cheap-but-skilled labor for the rest of it (with the Economy down like it is, you can get quality sub-contractors for very low prices).    Thanks for the idea about a Video.

Posted by Fred Griffin, Licensed Florida Real Estate Broker (Fred Griffin Real Estate) almost 7 years ago

Hi Fred, Oh to have a brother that is a licensed building contractor!  I am most curious about jacking up the house and leveling it but the project sounds like fun to me!  Please keep us posted and I'm already looking forward to the video!

Posted by Linda Holloway, REALTOR®, Your Next Home in Tampa Bay Starts Here! (Keller Williams Realty Tampa Central) almost 7 years ago

How great when knowledgeable people repair, restore, renovate a great old home! 

Please do a video!

Posted by Marge Piwowarski, Phoenix AZ Horse Property, LLC (Phoenix AZ Horse Property) almost 7 years ago

Fred, You guys definitely have your work cut out for you!  I love John's idea for a video from time to time.  The return on investment can be wonderful. 

Posted by Christine McDaniel, Broker Associate (Coldwell Banker Residential Brokerage Porter Co.) almost 7 years ago

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