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Why We Gladly Lost 20 000 Flipping A Utah Fixer Upper House
lush with cash from two for sale in Santa Clara. Santa
recently sold fixer uppers, Clara is a small town, just
my partners and I buy an outside of St. George.
expensive fixer home hoping to
flip it for big bucks. All we got The bank had had the home had
was a lesson in what not to do been for sale for about two years
and a large tax deduction for with no takers. It was a Santa Fe
2006. This article explains how style, luxury home built in 2002.
we, the investors, got flipped… The home was 3000 sq. ft., had
amazing views, slate tile
In August of 2005, my real estate throughout, a three car garage, 4
business partners and I were bedrooms, 4 bathrooms and tons of
flush with cash. We had just made upgrades throughout.
$45,000 from having just fixed up
and then sold 2 mobile homes in The home was unfinished and had
St. George, Utah. The excitement never been lived in. It was clear
of making so much money so that the builder had run out of
quickly had gone to our heads. We money before he could finish the
thought we were invincible. We home and sell it. The kitchen was
were about to learn the truth. unfinished. The tile was cracked
here and there from settling. The
After the mobile homes had sold closets were totally unfinished.
my partners and I began looking The yard was a jumble of weeds,
for another fixer upper that we mud and boulder sized rocks.
could flip. I wanted to move up
into flipping expensive houses, At the time that we looked at the
thinking that we could make more home, St. George was coming to
money that way. the end of an amazing run up in
home prices, about a 1% increase
I was aware of a foreclosed home in home values every week for
months. My partners and I were various other fix up / finishing
aware that the market would slow costs.
down sometime in the future, but
what we didn’t know when we We put the home back up for sale,
bought the home, was that the almost immediately upon buying
market slow down had already it, for $525,000. We truly
started. thought it would sell quickly for
this amount when we were done
Well, we made an accepted, full fixing it up. The home was for
price offer on the Santa Clara sale the entire time we were
home ($395,000). We made a full working on it.
price offer because there was
another buyer that was After the repairs were done, the
negotiating with the bank to home sat on the market for
purchase the home at the same months. The St. George real
time we were. We felt we could estate market had ground to a
make money on the home and we halt during the time we were
wanted to make sure that we were working on the home. We ended up
the buyers the bank chose to buy having to make about $9,000 in
the home. mortgage payments while we
anxiously waited for the home to
We ended up buying the home for sell.
$395,000. We also financed our
closing costs, bringing our In March of 2006, seven months
mortgage loan amount to $400,000. after the purchase, we were
beginning to panicking because we
After the purchase, we invested weren’t certain we could make
$15,000 into fixing up the yard, anymore mortgage payments. We
about $4,000 into finishing the didn’t want to lose the home and
closets and another $6,000 in our investment, but the mortgage
payments were eating us alive by Closing
this point. Costs........................-$4,
000
We were forced to gradually lower What we paid for the
our asking price until finally we home..........-$400,000
had our asking price at $430,000. ---------------------------------
In March we breathed a sigh of --------------
relief as the home finally went Total
under contract at this price. loss..........................($2
0,000)
We sold the home in April 2006.
Our costs to sell were about We felt very lucky to have been
$16,000 including the $12,000 able to sell an expensive home
commission that was paid to the when our local real estate market
buyer’s agent. was so bad. There are a lot of
investors that bought at the top
Here’s what the final tally on of the market who haven’t been so
the fixer upper Santa Clara home lucky; people who are stuck with
was: homes that they can no longer
afford. These investors are
What we sold the home wondering if their homes will
for...........$430,000 sell before they lose them to the
Fix up bank.
costs........................-$25
,000 Strangely enough we are actually
Mortgage looking for another home to fix
payments....................-$9,0 up. We are going to stick with
00 mobile homes or condos and just
Commission rent them out. The lesson that we
paid.....................-$12,000 learned is that the less
expensive the fixer upper home investor.
is, the less risk there is to the
About the Author:
This content is provided by Don Glasgow and may be used or republished only in its entirety with all links included. To read more investing articles click Here or Here.
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