Presentation given at the Boston Area REIA on 10-17-13. This presentation was a case study on how to flip a property in a terrible location. Sewer Plants, train tracks and being in the flight path of the airport were all issues that were overcome!

1. 33 Riverview St.
North Andover, MA
How to flip a property
with a challenging
location.
Shaun M. Reilly
Shaun@rre-homes.com
Copyright - Reilly Real Estate, LLC

2. Alternate Title
“How to Flip a PO$”
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3. Who Am I?
 Raised
in Dracut, MA
 Graduated from Boston University 2000
–
Bachelors in Math and Chemistry and Physics Minor
 Graduated
–
–
from Boston College 2007
MBA with focus on Operations and Finance
MSF (Master of Finance)
 Started
in real estate March 2007
 Full time since Jan 2010
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4. Challenging Location?
 What
makes a challenging location?
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5. Nice Neighbors
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6. Challenging Location?
 What
–
–
–
–
–
makes a challenging location?
Being across the street from a sewer pumping station.
Train Tracks running through back yard.
In flight path of municipal airport.
Near several other industrial buildings.
Right by the Lawrence border.
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7. How did I find this gem?
 Looking
at properties late at night and came
across this place on auction.com.
 It was ~11:30PM on a Sat night, auction ended
on Sunday morning.
–
Was not going to be able to visit property.
 Probably
 No
–
would not have anyway.
bids and the opening bid was $63,500.
Listed on MLS at $109,900.
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8. How did I find this gem?
 Their
were no other offers!
 Talked to my contractor to come walk it on
Monday before I had to wire in funds.
 Figured it would have a lot of work since ARV
should have been ~$250K.
–
–
Once we saw the location took about $100K off.
However was in MUCH better shape than
anticipated.
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9. Scope of work:
Removed possible copyrighted image of a pig with lipstick
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10. DON’T over rehab!!!!!!
 Resale
value is limited.
 Do what you need to do and make it attractive.
 High end finishes will not make you more
money, and probably won’t sell it any faster.
–
Even with granite counters it is still across the street
from the sewer plant.
 You
need to find that “Special” buyer for this.
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11. Before:
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12. After:
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13. Heating System Before:
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14. Heating System After:
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15. Marketing Strategy
 Price
–
it right!
It was a terrible location and needed to be priced for
that accordingly.
 ~$100K
less than similar un-rehabbed homes.
 Similar
priced houses in town were uninhabitable
REOs and Short Sales.
–
One suggested bringing a mask to help with the smell.
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16. How did we sell?
 Got
LOTS of requests at that price point
 Over 50 showings with 68 DOM
 2 Offers on it
–
1st fell through at inspection
 Only
–
sold for $900 under list price
Did give a $2,000 credit and did some repairs
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17. Financials:
Expense:
Buy Price
Settlement Fees (BUY)
Construction
Interest
Taxes
Insurance
Utilities
Miscellaneous
Commissions
Settlement Fees (SELL)
Income:
$66,150.00
$9,637.42
$33,148.13
$4,300.11
$1,766.63
$639.55
$915.05
$217.50
$7,850.00
$3,430.04
Seller Agent Commission
Sale Price
TOTAL INCOME:
$2,747.50
$159,000.00
$161,747.50
Buyer had a $2,000 Credit
Commission was 5.0% on Net $157,000
TOTAL EXPENSES: $128,054.43
Gross Profit:
$33,693.07
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18. Summary:
Flipping challenging properties
1)
Buy right!
–
1)
2)
3)
Cheapest MLS sale since August 1994
Do not over rehab.
Know your exit strategy to sell.
Work with any reasonable offer, you never
know when you will get another one.
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19. Two Kinds of Real Estate Investors
1.
Those that make a ton of money
2.
Those that give up too soon
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