Sold First Rehab Got A Check Today For $87,369
A lot of work and stress and decisions ... but all well worth it.
I bought a 3/1 SF cape which was my first rehab for $108.000. Did a great job, didnt cut corners and didnt want the cheapest stuff in the house ( not the most expensive either) : new windows, new carpet, new kitchen cabinets, etc... HW already in kitchen and dinning room. The quality of the work showed. Hold it for 7 months( 3 months too long) because I tried selling it myself initially with just a yard sign but it didnt work out. I got a lot of tire kickers and others who wanted what seemed like a 25% or so price reduction. I knew the key was to take it to the MLS but knew I wouldnt have time for all the showings if I went flat fee because I have a full time job. So I listed with an agent ( the same I used to purchase the house). Got an offer on the first day. 40 days later, we closed Friday 9/30/05. sold it for $208,000.
After fees and commissions my check was $87,369. Just received it today. net profits before tax is about $54,000. Not bad for a first time rehabber. Im finishing my 2nd rehab in a couple of weeks and that one will have a better profit margin.
Good luck to all of you rehabbers. never give up.
[ Edited by vguess99 on Date 10/04/2005 ]
Not bad at all! Thanks for sharing and for encouraging all of us rehab newbies. You just took the edge off my fears.
Awesome job! Keep up the good work!
Hey-Hey!!
Congratulations. Thanks for the success story.
Super! It must have felt very satisfying. How much did you spend on rehabing? The math says 33K.....?
Good story thanks for sharing
Congratulations... how did you find such a great deal? Foreclosure?
That is truly inspiring...
Was the home a foreclosure?
it was a bank owned property that was listed on the MLS.
wow bank owned property for 50% of what you sold for !!! that is great. Most of the mls lisiting of REO are like 15% of FMV.
Congrats!
[addsig]
Awesome!
Here a good return on a major rehab is 25k I am glad that your first experience was positive..
[addsig]
vguess,
awesome work..hope everyone has this kind of success..your next project should focus on how to shelter those gains from taxes!!
Yes, congrats...54k IS impressive.
Can I ask you about taxes? Others here have said that on such a project you have to pay ~28%-33% income tax, plus ~6%-10% state tax, plus ~15% self imployment social security tax--or up to 58%. If I am not mistaken, that will turn your 54k profit into as little as 23k. Also, you will not be able to claim depreciaiton on the property for the months you held it--costing you even more...
Can anyone comment on how accurate this is?
Venator,
Im no tax expert so my CPA will figure all this out.
Cap gain rate is your personal income rate if you hold the property less than a year. I currently have my primary residence + 3 other rentals + 2 rehabbed properties which will barely bring an income this year which I will hold until past the end of the year and a potential rehab that I will start on next week if the closing happens.
All this to say that the depreciation on all these other properties should more than cover my gains on this flip.
The tax liabilities are also why Im not so eager to sell my current "finished"( I just need to change the light fixtures) rehab.
Thanks for the insight