Profile of the Project
We made $102,000 on a single family flip in two years.
- Location: Palm Harbor, Florida
- Type of Real Estate: Single Family Home
- Scope of Project: Acquisition, Rental, and Disposition
- Length of Project: 2015 to 2017
- Size of Real Estate: 1 Units
- Purchase Price: Bought for $155,000
- Selling Price: Sold for $275,900
- Investment: $155,000 down, $20,000 rehab investment
- Average Rent of Building: $2,350 per month
- Historic Vacancy Rate: 100% occupied during rental period
That’s the first word that came out of my mouth when I got the property under contract. After bouncing around the MLS and the various auction sites for six months, I knew there was something peculiar about this Fannie Mae foreclosure. Having learned that the last contract fell through because of a lack of disclosure that the property had a sinkhole-claim, I was skeptical but open to a new product type I’d never worked with before. Everything makes sense for the right price, right!?
So the keyword here is sinkhole “claim”. After inspecting the property and having an engineer do a structural check, I made a call to my insurance broker who told me “if you can insure it, you can put a mortgage on it”. Turns out it was insurable, and there was no record of sinkhole activity in the area. I figured it was one of those blue-collar lottery type deals where the owner was under water with their mortgage, filed a sinkhole claim, received a cash payout and skipped out on the mortgage.
It turned out to be a great property; I lived in it for a year, rented it for a year, and sold it for a tidy profit.
- 1st year cash flow: $28,080 (rental)
- 2nd year cash flow: $73,920 (sale)
On top of cash flow, I made nearly $74,000 at the sale!
Lessons Learned from the Project
Sometimes you just get lucky, and that was evident with this property. I did my research and figured out I could buy the property and re-sell it, as long as there was no evidence of structural damage. Granted, the necessary disclosures were made that there was a previous claim on the property, but fortunately, another insurance carrier didn’t mind the prior payout. By not judging this book by its cover, I was able to get an affordable home in a great area with some built-in equity!