Was This Foreclosure Flip Worth It?
December 2nd, 2009 categories: Coconut Grove Real Estate
This house on Kumquat Avenue is the first foreclosure flip in Coconut Grove to sell.
The house has had quite a history. The house originally sold for $900,000 back in 2006 (clearly mortgage fraud). It was put back on the market as a foreclosure on July 8th in 2008 at a price of $259,000 and was gone in seconds. I wrote about the house the day it came on the market here Foreclosure on Kumquat. The house was purchased for $250,000 by the investors.
After extensive renovations to the interior, it was put back on the market in June of 2009 at a price of $675,000. They received a contract within a month but the deal fell through. The owners then reduced the price to $635,000. They received a contract and the house closed this week for a price of $580,000.
I showed the house several times to clients and can estimate that they put about $200,000 into the renovations (new electric, new plumbing, new bathrooms, new kitchen, new floors, new impact windows, all with permits). The owner was the Realtor so she saved 3% commission on that end, but had to pay 3% to the buyers agent.
Here are my calculations:
- Sales Price of $580,000
- Less $17,400 (3% Buyer’s Agent Commission)
- Less $200,000 (Renovations)
- Less $259,000 (Cost of Home)
This left the investor with approximately $103,600 in profit. Out of the $103,600 the owner had to pay a years worth of property taxes, and closing costs on the purchase and sale of the home. They probably made about $50,000 on the home when all was said and done. (Keep in mind, some of these numbers are speculation on my part).
So after looking at the figures, was the flip worth it, what do you think?
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