Last October, we joined financial forces with The Pony to invest in a flip house. Flip houseS.
A 2-for1 deal. We looked quite a while to find a suitable property. Prices were high at that time, and flip houses hard to find. Most were more than we were willing to pay, or needing too much bone-work to fix them up. Our construction-savvy Hick knows his way around a hovel.
I put a couple pictures here, but if you want to see the others, just click here, or on the
DOUBLE HOVEL tag at the bottom of the post.
Anyhoo... we decided on this property, with a house that had been rented and needed repairs, and a vacant beauty shop that still had the fixtures in it. That's the beauty shop below, house in the background.
It's a quiet street, corner lot, a mile from the center of two towns, in a good school district. Hick's plans for the beauty shop are to make an efficiency apartment. It could be good for the elderly, a college student (local junior college is less than 5 miles away), or a single parent with a young child. The main draw of this property being TWO houses. So an investor would have two rental properties, or an owner could live in one house, and rent the other to help with payments.
This is the main house, that had been rented until a couple months before we bought it. The old owner was going to make repairs and then sell, but just wanted to get rid of it. We have put money into it, though some of our input is FREE Hick stuff, and Hick's unpaid labor. The electricity is done, and the plumbing almost done. Plus roof repairs inside, and re-framing to add a second bathroom. One new toilet is in.
A couple days ago, I mentioned that a
Random Guy called Hick to see if he wanted to sell the Double Hovel. Hick said not really, but he might think about it. Random Guy said he found the Double Hovel on Google Maps. He's part of a team that buys and renovates houses. His financial partner was out of town, but he would call back to see what price Hick had in mind. Hick was going to ask for 10 percent over what we have invested in the property. The Pony and I (and apparently all five of my readers) thought that was too low!
Hick said if we sold, he would probably look for another house to flip. So I know he's not wanting to sell because he doesn't feel physically capable of renovating the Double Hovel. As he pointed out, the hard work is done. It's just the drywall, paint, flooring, kitchen cabinets, and a deck left, since the AC/heat will be hired out. He says between the two buildings, we'll probably have to invest a certain max amount in expenditures. Could be less, depending on the condition of the floor and foundation in the beauty shop.
Hick thinks the finished property will sell for a minimum of double what we paid for it. That's according to what a couple of his local buddies have sold their flips for. At best, we might get another 50 percent of our initial investment, depending on the market when we are ready to sell. The main selling point being TWO HOUSES. This property cannot be split for sale. It will be an income-producer for whoever buys it.
After discussing our potential profit, and what we had already put into Double Hovel, we arrived on a selling price that is 35 percent profit on our current expenditures. That would give us the minimum profit we could get upon completion. I made it clear to Hick that we don't NEED to sell. That our asking price should be X AMOUNT, firm, and buyer pay all the closing costs. NOT A PENNY LESS! In fact, Random Guy is lucky I'm not asking for gas money to drive to the closing, heh, heh!
You can probably see where this is heading. Hick is not known for his negotiating skills. In fact, I banned him from accompanying me on a car-buying trip for that reason. Hick's technique is: offer, counter-offer, split the difference, split the difference, handshake. Hick likes to be a nice guy. I'm not afraid to be a penny-pinching b!tch. I don't care what the other person thinks of me. I didn't make it through 28 years of teaching by having a soft shell. Sometimes you have to stick to your plan, no matter how unpopular it might be.
Anyhoo... Random Guy called Hick on Friday to ask more questions. Like the condition of the beauty shop, and what it will need to fix up. Also whether we have financing. First of all, Hick is NOT this guy's contractor. He needs to get his own rumpus over there and look at it, not ask Hick what is needed to fix it up! You'd think finding out that we did NOT finance it might have been a clue that we are not desperate to sell. Hick told Random Guy that after the work he's put in on the main house, we need to get X AMOUNT for the Double Hovel. BUT THEN... Random Guy asked, "What if we have a reasonable offer less than X AMOUNT?" And Hick said HE WOULD ENTERTAIN IT!
Saturday, Random Guy called Hick and offered $1000 less than what we originally paid for the Double Hovel. The Pony said this was an insult! I don't blame Random Guy. He's a businessman, out to make the most money he can. I don't hold that against him. Hick laughed, and said, "You're wasting my time with that offer." So Random Guy says, "How about if I meet you in the middle?" And added on $10,000. Hick snorted at that and said, "No." I think Random Guy needs to look up the definition of MIDDLE, heh, heh.
Anyhoo... Random Guy said, "I'll talk to my investor. But we don't know what we're going to do with the beauty shop." And Hick said, "I don't either. I might make it an apartment. But it might end up being a garage. I'll have to see when I get the other house finished."
It's not like we are sitting on pins and needles waiting for the next call. It's fine if we never hear from Random Guy again. I'm pretty sure he found out what we paid for the Double Hovel. It's public record. After all, he found our name as the owner to call us. It's pretty gutsy to offer LESS than we paid, after the electric, plumbing, and an added bathroom have already improved the property. But that's just doing business, I guess. Or trying to...
