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Case Study - Houston Flip
Purchase Price: $225,000
Rehab: $80,000
ARV: $400,000
Sale Price: $440,000
Investor Cash Return: 300%
This flip ~2,100 sqft fix & flip is located in one of the hotter neighborhoods of Houston. The experienced investor sourced the investment property themselves and performed a full cosmetic rehab to completely transform the property.
Lots of creativity and appropriate finishes for the price point resulted in a home run for the investor with a 300% cash return and sale over asking price. Some features included:
- Pop-up bead board ceiling in the kitchen
- Addition of windows to introduce light and connect the front yard enclosed patio area
- Gold finishes throughout to match the current trendy modern farmhouse style
The investor was pre-approved for a hard money loan, was able to move quickly, and had a proof of funds letter to strengthen the offer. A BRRRR method (buy, rehab, rent, refinance, repeat) exit strategy was considered, but in this case it made more sense to sell due to the multiple offers over asking price and other deals the investor was working at the time.
A refi appraisal would have likely returned a value closer to the ARV. As a result, they would not have been able to pull as much cash out during a refinance into a long-term rental loan.
A refi appraisal would have likely returned a value closer to the ARV. As a result, they would not have been able to pull as much cash out during a refinance into a long-term rental loan.