Have you ever seen these TV shows where someone buys
a fixer-upper home that needs work, they go in and fix it up, and then
they flip it for a quick sale? A lot of people say those days are over
but we’re always looking for new opportunities. If you want to do a
successful flip today you need to make your money going IN, and make
sure you have reduced all the variables.
We’ve found a house that is flip-worthy. Here is a 3
bedroom 1 and ½ bathroom foreclosure home on the Willow Glen / Cambrian
border just waiting for a remodel. There is equity to be made on this
1871 Potrero Dr, San Jose CA 95124
3 Bedrooms, 1.5 Bathrooms
56 years old
1050sf living space
Why is it a good deal?
A similar home was listed just 4 houses away on the same street for
$575,000 in great condition and it sold in 7 days. So, we know the
market is there. This house is right down the street from Fammatre
Elementary School and Ida Price Middle so the family who buys it will
be walking distance to school for up to 8 years. It has a big lot so
there may even be a possibility of expanding.
Here is what you need to do:
Turning the ½ bath into a full bathroom in the master suite will add
huge value (it now becomes a 3/2). The existing layout makes this easy
because you can reposition some closet space to make room for a shower
so it really isn’t that much work. It needs new hardwood floors (and
maybe some sub-flooring) since I can see termite damage in the floors.
It needs 2 bathrooms remodeled. It needs a kitchen makeover as well,
but now is the time since there are no appliances at all (it’s a
foreclosure, remember). I say you offer $400k for it, plan to put $75k
into it and go to market at $559k. You’ll make $45k after transaction
costs. The question is – How fast can you get it done because springtime is coming!
$10k master bath
$6k hall bath
$30k Ikea kitchen and appliances
$15k for nice new hardwood floors throughout
What is the risk?
Maybe you can’t get it for $400k, and that certainly is a challenge
here. It has just been on the market for 2 weeks so maybe let the bank
get a little more “flexible” the longer it stays on the market. Do
inspections ahead of time (roof, chimney, furnace) just to make sure
there are no surprises. There is a risk that your flip takes too long
and too much money of course which will eat any chance of profits.
Who is the best buyer?
This could be a first-time flipper because the work is mostly cosmetic
and not very structural. It may be possible for someone who wants to
live in it as you go through the remodeling however you need to find a
way to survive without a kitchen. To have your best shot at the
highest return, you need to be on the market for the summer selling
season in June.