Brian excitedly called me from work the other day about another potential flip. After checking it out online I was a little skeptical because it is technically a manufactured home. Not that there is anything wrong with that, it is just a little riskier when it comes to flipping because they usually don't hold as much value. Here are some facts:
List price: $13,600
Square footage: 1188
It was built in 2010, so the house is newer construction. This is music to my ears as it means we probably won't have to invest a ton of money into the systems behind the walls. The roof, electrical, plumbing, and HVAC should still be in decent condition. We do need a new AC unit, but if that is all it needs system-wise, that is pretty awesome. Plus, the risks of termite damage or other structural issues are pretty low in a house this new.
We also loved the fact that it is a three bedroom, two bathroom home. Our realtor and friends who have flipped tell us is the most ideal floorplan for potential buyers. Plus, the price! You can't find a house this size for that amount.
For a manufactured home, the kitchen cabinets look pretty nice. This house would be a lot of cleaning, elbow grease, and replacing finishes. Oh cosmetic fixes, how I love thee!
Ok, so in addition to it being a manufactured home, the location is not ideal. Not bad, but not great. A little far from the center of town, but still a safe, quiet neighborhood.
We talked to a neighbor one day and found out that the previous owner's son had vandalized the place (as evident by the photos) when it went into foreclosure. Drywall and carpet repairs are one thing, but if the vandalizer is vindictive enough, those repairs can get costly (think cutting electrical wires or pouring cement down drains). We could be opening a can of worms.
Lastly, this place stinks! Animals, bugs, and other unmentionable things seem to have marked their territory in this home. Hopefully, it is fixed once we remove the carpet and has not seeped into the subfloor. Warning, this picture is gross, but this, my friends, is where the money is! In roach poop! ;)
Even though the repair list consists of minor items, if the ARV (after renovation value) is still too low, it may not be a good buy. Here are the repair costs we estimated:
Carpet and Pad: 2100
Trim/Door Paint: 100
Exterior Door Paint: 20
Painting Accessories: 30
Drywall Repair: 1500
Interior Doors: 180
Interior Door Handles: 99
Door Hinges: 50
Ceiling Fans: 280
Outlet Covers/Switchplates: 7.5
Cleaning Materials: 100
Vanity Mirrors: 200
Shower Head: 60
Plumbing Repair: 400
Replacement Window: 150
Door Casings: 40
Front Door: 200
Front Door Hardware: 70
Door Knocker: 14
Deck Repair: 100
Built-in Repair: 40
Caulk & Misc. Hardware: 50
AC/Heating Unit: 4000
10% buffer 1209.65
Final total: 13818.91375
We estimate that once this house is renovated, it could sell for about $70,000. While the list price is low, we know it is priced that way to get multiple offers so our purchase price would be higher. Let's say we go in with an offer closer to $25,000.
$70,000 ARV - $25,000 PURCHASE PRICE - $14,00 RENOVATION = -$31,00 PROFIT
This profit is before realtor fees, closing costs, and carrying costs which would lower our profit buy a few more thousand dollars, but close to $30,000 in profit is still a tidy little sum!
Even though it is a little bit of a gamble flipping a mobile home, the newness of this house combined with the desirable bedroom/bathroom amount, it could still be a home run. Therefore...