The Early Bird Gets the Worm
Let’s be honest, it’s a competitive market out there. Inventory is low and homebuilders aren’t able to create housing that the average home buyer can afford. With a median household income of $75,847 most Maryland homebuyers are looking at homes priced under $400k. This means you are almost guaranteed to be looking at a multiple offer situation for any desirable houses in this price point.
The Workshop Flip was put under contract back in March off the MLS. Priced at $125,000 it was dated but offered a lot of potential as a single family house. Evan and I loved the neighborhood and knew that it would be receiving a lot of attention. To get a good shot at the house we used one of the oldest tricks in the book: Speed.
We were one of the first people through the house and one of the first groups to put a contract on the house at list price. We removed all contingencies and made the sale a sure thing for the sellers. When they came back with multiple offers, we did not fool around. We sat down with a spreadsheet and calculated that we could come up $8k over the asking price. Many people have a difficult time paying over the list price, but in a competitive market this list price is arbitrary and you have to pay what the market will bear. The tactic worked and we got the contract!
The Workshop Flip was an estate sale, meaning that the property was being liquidated to get finance probate. As such, the sellers needed us to purchase with cash. $133k is a lot of money so we turned to the next best thing, hard money. We contacted Washington Capital Partners out of Washington D.C. and they were excited to finance. We paid 10/2, 10% interest w/ a 2% origination fee, and they financed 90% of our purchase price and renovation budget.
Hoarder Houses are Expensive to Clear!
The listing agent gave us the heads up before we listed, but we didn’t think it would be that big a deal. When getting the house ready for sale, the owners had moved everything into the garage. The main house was empty and while the garage looked filled from the side window, we figured it was a small concession to get the transaction closed.
Little did we know, the garage had a second floor! Every inch of the space was filled with newspapers, old furniture, and trinkets. The owner had been a hoarder and we had decades of accumulation to deal with. $3,500 and many dumpsters later, we finally had the place cleared out. It was an expensive lesson, but something we will account for in the future.
What we loved about the house was that it was laid out in a traditional fashion with all the bedrooms on the second floor. This makes the home more desirable than the cape cod models which feature half the bedrooms on the main level. Since the main level was dedicated to living space, we could bring down a number of walls and create an open concept layout. This required us to install an LVL structural beam to bear the load of the second story without as many walls.
To make the space more functional we replaced the dining room window with a sliding glass door. This gave easy access to the back yard and allowed for ample daylight to fill the room.
Getting Over Speed Bumps
Nothing every goes exactly to plan. While we were renovating this property our carpenter walked off the job. He felt that it wasn’t a good fit for him and he wanted to spend more time doing retail jobs. While it was unexpected, Evan was able to step up and quickly find a new contractor with the help our electrician, Mike. The new guy ended up being much better suited for finishing the house and hand a crew of guys working with him. The project, which had been drawn out longer than necessary, was finished quickly thanks to the new crew.
Above and Beyond
Evan had some great ideas to add additional value to the property and make it stand out on the market. He had the crew clean and paint the interior of the detached garage and then had our electrician wire up the interior with electrical outlets and overhead lighting. This made it into the perfect spot for a workshop.
In the back yard he cleared away all the overgrown brush and laid down gravel to create a fantastic fire pit area! This yard became the perfect set up for any handyman who enjoys the outdoors.