The Skinny: 
ARV: $460,000
Purchase: $332,675 – Subject to the existing mortgage and equity. 
Rehab: $96,000 – 6 months
Sale: $429,900

The coolest part about this project is that we were able to secure profit on a deal in a downward trending market. 

Raquel Custer met the seller of this property at a conference. The seller was a single mother living in a house that was in rough shape. She had a ton of equity and just wanted to start over. She wanted to rent a nice place but didn’t know how to do that because she didn’t have income at the time. We helped her solve these problems. 

In August 2022 we gave the seller $100k so that she could get approved for the rental application without income. She deeded the property to us subject to the existing mortgage. We created a shared not with her with the remaining equity on the project so that at the sale we would split the profit with her. This structure was unique, but it was a good bet for her to get upside on the sale once it was fixed up. And it was a safe play for us because the market was starting to trend downwards and this secured a profit regardless of how low the market dipped. We were splitting the seller’s equity. 

We worked with a hard money lender for the $100k. We worked with a price money partner to provide $66k for the rehab budget. We also used 0% credit cards for the rehab budget as well. 

As soon as the seller moved out of the house we went to work. Raquel managed the rehab. It was a lot of coordination but she got it all knocked out in about 8 weeks. That was a very quick turn around for a fix in flip. We were racing the market and every day mattered. 

We listened the property for sale around $465,000. There was lots of initial interest but the market dictated lower than that. No offers. We slowly dropped the value over the next month. No bites. We lowered it to $429k and had an open house. We found a serious buyer and closed in February 2023. The end sales price was lower than we had projected. This was because of the market changing throughout the process of this project. With rates increasing, prices decreased. The structure on this deal secured a profit despite the unstable market.

All in all it was a success. The seller was happy to have her own nice place to live and start over. She was ecstatic to see the old dilapidated home she lived in completely fixed up. Raquel completed her first fix in flip! Our investors made great returns! And we were able to have a descent profit despite the dropping market. 

Key takeaways: 
– Subject to financing
– Structure the deal in a way that hedges against market down turns
– Be open to creative financing options that meet the seller’s needs