https://www.redfin.com/CA/San-Francisco/26-Eastwood-Dr-94112/home/1446737
Westwood Park. They bought it for 1.1M last year in an off-MLS sale. Sold for just over 2M this week.
Before:
After:
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Here is my part some rough estimate.
Even though flipper gained good amount of money, let me do some simple math assuming he purchased 1.1M last year…
He listed at 1.7M, bought at 1.1M, difference is 600k. Most likely the remodel cost is 300k
He needs borrow money (carrying cost) 1.1M+remodel cost (300k) = 1.4M * 4% * 8 month /1200 = $37000
Sale commission appx 4% = $80000
Remodel cost appx $300k
Expenses are almost $417k (80k+37k+ 300k) + purchase 1.1M = 1517k
Net profit 2M - 1.517M = 483k. Since my remodel cost is low side conservative, we can assume the net profit may be between 400k and 450k.
Excellent flip !
Please feel free to show me more realistic calculations if my assumptions are wrong somewhere.
BTW: I like this kind of subject than politics. IMHO, We can at least learn a lot around bay area.
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IMO, he/she did not spend that much (300k) in the remodel. I am not seeing it in the remodel. The windows appear to be the same, although the windows over the garage don’t match from the orig picture (odd) in the grid pattern so one ding. Always match up your windows throughout. I would say that does look like new wide plank hardwood throughout. Nice. But what else? Mostly cosmetic and just a new kitchen. Come on, even some of the bathrooms still have rod and curtains. Yuck. For 2M? No. He killed it in terms of profit, no doubt.
You are right, I missed seeing the difference, Thanks for pointing it. If there is no major remodel, work may be limited to 100k. In such case easy 600k ! Then Great flip!!
Well, as far as I can tell anyway (nothing major) other than perhaps the opening up of one of the walls leading into the kitchen. Not sure if that steel/wood beam is original. I agree, I may not be taking into account today’s higher contractor costs but it doesn’t appear to be 300k worth anyway imho. Obviously, the staging was well, well worth it.
Plumbing?
Electrical?
Roof?
HVAC?
Did they purchase it undermarket? If so, did they create value with their work or did they just realize the difference between purchase and market?
Zillow has some extra details - new plumbing, electrical, insulation, 2 furnaces, water heater, and a total of 2767sqft. Converted basement?
@Jil your carrying cost calculation assumes the flipper didn’t put any money down. I don’t think anybody will lend them money without some of flippers own skin in the game.
The Zillow information might be old or incorrect. Lame…
Note: This property is not currently for sale or for rent. The description below may be from a previous listing.
Redfin shows the property as 2/1 when last sold, with significantly less sqft. Now 4/4.
Also, it was purchased/resold by the same RE agent.
For Cap rate, we do not account mortgage.
Similarly, for flipping we just calculate full purchase price interest (without considering down payment) as this is like business write off. In fact, flippers with either have full cash or they pay high rate of interest between 10% and 18% range.
After one or two flipping, flip company may have sufficient cash , by high returns, to take the home on full cash offers.
That is why I accounted carrying cost with full purchase price.
Yes, there is a cost of capital unless you are saying your capital is free. If it is, can I borrow some!
This isn’t a 100k job at retail. They didn’t cheap out on details. One example is where they installed two sconces on the side of the bathroom mirror. If you were going with the lowest cost you would settle for one. Also, they put shoe trim to cover the gap between the base and the floor.
The profit you initially projected is good, particularly if you look at the IRR.
Ok, I didn’t know one can pull up the old listing details. So def some work was done and money was spent. I am still leaning less than 300k though, maybe more like 100-150k maybe? To me, those front windows would look better plain than with the prairie style grid pattern (I know, came that way from the original).
2,800 sqft of engineered flooring installed
at 10/sqft = 28,000
at 15/sqft = 42,000
That’s a big number just for a new floor. I don’t know what grade of flooring this is, but taking a look at the other details makes me think it’s not the special markdown.
Going back to Jil’s original assumptions the IRR comes in just under 45%. That’s a nice return. You can take it out another step and look to see if it was purchased under market. If so, that IRR number could have been much higher than 45%.
A 2800 sqft house has probably only 1600 sqft wood floor surface.
Think baths, underneath cabinets, walls. Staircase?
Good observations, @ww13. No doubt they did a pretty nice job on the remodel and staging because at the end of the day no one can argue with the profit. Either you made it or not. I guess I am just being nit-picky but shower rod and curtains on a 2M home? Put on two $200 frameless shower door enclosures and call it a day. I am pretty anal about curb appeal, so I would have matched up the windows with the same grid pattern throughout. Shows immediately for those anal types that yeah we (the flipper) thought of it…
Engineered flooring can be put in for $5-8/sf