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kane · 11-19-2006, 12:53 AM

I did this once with a few friends. It is a lot harder than the show makes it look. Sorry for the long post, but here is my experience with it.

You need to find the right house. This means you have to scour the foreclosures and/or find houses that need a lot of work and will increase in value greatly when the work is done.

The house we bought we paid 145K for. It was a foreclosure and was appraised at 165K when we bought it. We put about 25k into it. New paint, we knocked out a wall, put in new carpet and floors, remodeled the kitchen and did a ton of landscaping. Luckily the people I did this with knew how to do a lot of this stuff, but it still took us almost three months to do it because we all have jobs and couldn't work on this every day.

After the improvements the house was reappraised at 240K. Where I live that is pretty much what an average 3 bedroom with a yard goes for ( actually that is lower end of the market these days ) It took us three months, but we sold it for 235K.

When you figure it out:
25K for remodel
4 house payments of $900 each = 3600 ( I say four because we put 10k down and were given 60 days until the first payment was due so we had to make 4 payments while we did the upgrades and sold it)

Cost of realtor 3.5% of sale price approx $8200

Other (including inspectors, research, permits etc) $500

Total profit approx $52,700
Split if 4 ways around 13,100 each. Not bad, obviously with less partners it could be more and we made mistakes that cost us money. Looking back we could have got a price cut probably down to around 2% for the realtor and we could have saved around 5K on some of the things we did wrong with the remodel. Also we could have afforded to put more down and should have negotiated a better mortgage. If we put down around 40K we probably could have negotiated to not have any payments for 6 months.

Also, it really is hard work unless you know where to hire good cheap contractors, or you are willing to make less profit and hire contractors. A lot of it depends on the market you are in and things like that. There is some money to be made, but it's not as easy as the show makes it out to be.

Would I do it again? Yes under the right conditions.

11-19-2006, 12:53 AM
kane Too lazy to set a custom title Join Date: Aug 2001 Location: portland, OR Posts: 20,684	I did this once with a few friends. It is a lot harder than the show makes it look. Sorry for the long post, but here is my experience with it. You need to find the right house. This means you have to scour the foreclosures and/or find houses that need a lot of work and will increase in value greatly when the work is done. The house we bought we paid 145K for. It was a foreclosure and was appraised at 165K when we bought it. We put about 25k into it. New paint, we knocked out a wall, put in new carpet and floors, remodeled the kitchen and did a ton of landscaping. Luckily the people I did this with knew how to do a lot of this stuff, but it still took us almost three months to do it because we all have jobs and couldn't work on this every day. After the improvements the house was reappraised at 240K. Where I live that is pretty much what an average 3 bedroom with a yard goes for ( actually that is lower end of the market these days ) It took us three months, but we sold it for 235K. When you figure it out: 25K for remodel 4 house payments of $900 each = 3600 ( I say four because we put 10k down and were given 60 days until the first payment was due so we had to make 4 payments while we did the upgrades and sold it) Cost of realtor 3.5% of sale price approx $8200 Other (including inspectors, research, permits etc) $500 Total profit approx $52,700 Split if 4 ways around 13,100 each. Not bad, obviously with less partners it could be more and we made mistakes that cost us money. Looking back we could have got a price cut probably down to around 2% for the realtor and we could have saved around 5K on some of the things we did wrong with the remodel. Also we could have afforded to put more down and should have negotiated a better mortgage. If we put down around 40K we probably could have negotiated to not have any payments for 6 months. Also, it really is hard work unless you know where to hire good cheap contractors, or you are willing to make less profit and hire contractors. A lot of it depends on the market you are in and things like that. There is some money to be made, but it's not as easy as the show makes it out to be. Would I do it again? Yes under the right conditions.