- Blog & News
- Investment Criteria
- Speaking Engagements
- Our History
- Key People
- Our Culture
- A little bit about Curtis
- Words We Work By
- Employment Opportunities
- Our Guarantee to Brokers
- Contact Us
Chula Vista Flip… Going once, Going twice, Sold the cat pee house…
Ahhhh finally we sold our Chula Vista 2 bedroom 1 bath house.
trying to get rid of the strongest nastiest cat urine smell I have ever encountered (see video below for the smell O’ vision cam)
the 30′ septic pit we discovered (which was supposed to be a septic tank – actual picture)
paying $13,000 in city fees to hook up the septic (pit) to the city.
An appraisal that came in $20,000 to low.
Besides those little things you couldn’t have asked for a smoother, easier, less stressful transaction.
I must have been on a bathroom break (training the cat to pose for the picture above) while I was watching those get rich quick late night Real Estate riches infomercial (those nights I wake up thinking about sink holes, low appraisals, and dealing with city governments) hosted by those two midget dudes.
I just don’t recall seeing my little buddies mentioning those damned septic pits that cost 15 gees to take care of.
In addition they didn’t include the super duper negotiating navigating techniques it takes to keep a deal together with these challenges.
That must come with the more expensive course sold by Tom Vu
Here is my get rich quick Real Estate infomercial that I directed, produced and starred in. Watch out Billy Mays here comes Curtis “the cat pee terminator” Gabhart.
(if the video is loading slow take it of high definition by clicking the HQ button on the video)
I Wanted to give a quick recap of the first property we purchased in our 30 day challenge as part of the Gabhart Real Estate Opportunity Fund LLC, Series 1 or GREOF1 for short. We purchased a total of 4 properties and have sold 3 of them with the 4th under construction.
This property was purchased around the middle of June and I found it while combing the MLS in Chula Vista. Typically what I do is to do a search in a particular zip code with a specific bedroom count and then sort by lowest priced first and that’s where I start and that’s where I found this little Gem.
It was listed for $119,000 – $145,000 and as soon as I contacted the agent and found out it was available I dropped everything to go take a look because I knew there would be multiple offers and mine became one of them.
I originally offered towards the low end of the asking price and almost didn’t get a response until I got a hold of the agent (persistence) and she informed me that I was not in the multiple counter offer running. Well I felt confident I could get $230,000 at the low end and $250,000 at the upper end and even though there was a possible septic tank issue I raised my offer to $145,000 from $119,000 still sticking with my no contingencies and a four day close.
Well I got a response, won the bidding here is what happened next.
We closed on a Friday (by the way I like to try to close on a Monday when possible so we don’t miss any days doing construction.). Even though I offered a 4 day close and no due diligence (BTW you always have some time because they still have to get you all the paperwork, title etc. for your review and by that time I can have any inspections or bids done)
My biggest concern was the pee-pee smell and getting it out. When getting rid horrible smells Kilz oil based primer is a what you want to use on the walls and Natures Miracle (for pet odors) everywhere else. We did get the smells out by the time the property was cleaned, primed, painted, the rotted pee ridden floors were replaced and then refinished.
Our original construction budget was just over $20,000 and we hit it on the nose by not going crazy and really focusing on restoring it rather than doing a major remodel like we normally do. We decided to do the retro thing and use original colors and styles and really just clean it up nicely in about 20 days.
Even though the place was a friggin mess it still had many of the original items that were in great shape like the doors, the kitchen counters and we were even able to recover the missing kitchen cabinet doors so we could just paint the cabinets.
I had a lot of people telling me I had to put in new cabinets and granite counters and even new windows which if cost was not an object and I really thought I could recoup those dollars I would have.
I decided to just do what I did, a nice cute retro remodel and It turned out to be a wise choice because of the additional money the sink hole cost us.
I have been trying to price our properties in a range a starting a little on the low side (this is a little scary btw and not for the faint at heart or those prone to insomnia like me) and really market the heck out of the property AS SOON as it comes to market. Ill go over some great strategies to get a lot of activity on your listings at another time as long as you don’t tell anyone our secrets.
Apparently at least a few people liked what we did to the project and we had multiple offers. We didn’t end up with the lowest offer nor did we go with the highest. We went with what we felt was the best overall offer, a buyer with good credit and a LARGE down payment.
As a matter of fact as it turned out we had buyers willing to pay more than the appraisal came in out and thank goodness they were putting down about 50% and came up with some money (we also came down to make the deal work and the agents picked up a little bit of the slack.)
Well during escrow we had the septic tank inspected (couldn’t inspect it before we bought because of all the bushes in front, see the video for what I am talking about.) Instead when I bought it I had the plumbing scoped with a video camera and unfortunately it didn’t spotÂ that we had a non-typical septic system. So long story short add $13,000 in city permits to connect to the sewer and another $2,000 for the work to hook up the city sewer.
Here are the pictures of what we found and of us taking care of it…
Good thing we bought it well or it could have been a disaster.
Well that hole went 30 feet and it took 10 yards of cement to fill it…
How many city workers does it take to watch US pour cement in OUR septic system??? Well too many because there job was to trench from the street to our curb, they had nothing to do with us pouring 10 YARDS or a whole cement truck to fill this thing up!!! Maybe this is why the permit fees are $13,000 right?
I know I know you ask how many city workers does it take to watch another city worker dig a trench??? About 7 I counted….. 2 guiding traffic, 2 watching, 1 in the heavy machinery and….
So to summarize
we hit our pro forma exactly and thank goodness we were conservative with the numbers or the $15,000 would have really screwed us. Our cash on cash return still ended up being in excess of 130% due to the fact we were able to get in and out within about 90 days in combination with the use of leverage in the form of a hard money loan. Also remember when we talk about a 130% annualized return it assumes the money is always being turned over at this rate and there is no breaks in between purchases which doesn’t happen in real life.
You have to be careful with appraisals while flipping properties, especially if you own these properties for less than 90 days. Be prepared to show proof of the work you have done. Be organized and ready because they will ask you for receipts and justifications of the increased sales price. Figure they are going to assume you are doing something crooked because I think they must be upset that the public system (goverment) of business always loses money.
Your first buyer is usually the best so make it work (I already know this and try very hard to make a deal go through IF the buyer is serious.
For more information like our original pro-formaÂ click here
Well it just turned 7 and it’s time for my day job (if you wonder when we I have time to make these videos, blogs etc. it’s VERY early in the morning like 3 and 4 am when I wake up thinking about all the stuff I have to do that the damn infomercials and real estate gurus didn’t tell me about)
For the most updated information & news on real estate & Gabhart Investments go to our facebook & twitter pages
ps. click here to like us on facebook