1st Assignment Flip in Philadelphia! Yahoo! :)

My team purchased a property at 38th and Cambridge in Philadelphia close the Girard and Parkside as it is receiving heavy inflow of investors with the future Microsoft High School is being built around there area.

We made a bid for a 4br / 1ba after speaking with a neighbor about 2 door steps away who is a contractor. He told us it would take 25K to 35K to rehab and we took it face value when bidding at the Sheriff Tax Lien Sale.

We got the property for $11,2000 from the initial open bid of $5,000. We put our 10% down to secure our option on the property.

After opening up the property, we found that it requires exactly what the contractor said - 25K to 35K of work. During this time we were going to go ahead with it but we found a better deal in South Philly which we have built in equity in less than 3 months. We decided to let this go as there were better deals elswhere. Comparable houses were selling for 45K on average. After repair would would have broken even or have a little equity.

I started marketing the property on craigslist with the following ad:

$15000 - Handyman Special - Fairmount Park / Parkside Area
Date: 2005-04-02, 4:58AM EST


Semi attached 4 bd / 1 ba shell needs alot of TLC. It is about 1100 sq ft and great for a handyman wanting to own and live close to Fairmount park and Parkside.
Needs new plumbing, electrical, heat, back roof has burnt joists.
Cross section is 38th and Cambridge.

If you are seriously interested email the following:
Name, Telephone #, Proof of Funds

EMAIL ONLY IF YOU ARE SERIOUS

I received many bogus calls and usually the Philadelphia natives low ball as much as possible as there are usually other deals in the hopper. My strategy involved creating a buyer's list for future inventory and also getting a feel for what people may pay for properties out there. Most of the time any type of marketing is better than no marketing.

After 3 weeks of going back and forth I found 2 good buyers who was able to comply with the conditions set forth in the ad. They bidded the same bid and to end the stalemate I asked for a silent bid - "put your best offer in". One came up with $13,000 and we sold with an assignment of contract.

So for those who are into #s

Purchase Price: $11,2000
Sell Price: $13,000
Actual Cash Outlay: $1,120

Cash on cash Return (Purchase price - Sell Price / Cash Outlay): 160%

ROI (CCR for the year: in this case it took less than 2 months to close): 960%

For the most part if wanted to have long term wealth I would have definitely kept that house as I know the area is booming as we speak. I would say it will shoot up easily 25% appreciation in one year if not more. This is a definite buy and hold deal and we felt it the person receiving it would be well pleased.

LESSONS LEARNED:
* Create win win situations for myself - I could have won by holding or fliping. The more options I have the better.

* Create win win situations for others - it creates branding or reputation; the investor we sold it told me that they were cheated on another deal and were apprehensive about getting this done but I walked them through it

* Marketing is powerful - this deal was going to be a dead deal until some intiative is taken; my ad was not powerful but the exposure made it unique as it is rare to have a 5 digit property on it right now.

* Silent bids - I don't like going into bidding wars. No investor really likes it and in this case it was the same. I just ask for the "best bid" close to asking price of $15000. All good investors will ask for less than asking and it is expected. Price the property at near where you want it and ask for a silent bid if you don't want to go back and forth to push the price.

* Do not give a discount in high demand areas - we didn't give a discount and people STILL lowballed us. It is the nature of the game. Play it like that. First person that usually puts a # out there loses so unless warranted don't do it.

* Creating a buyer's list - now I have a list of buyers to pass on properties to. I created the list so it is more easier than blasting out on the Internet and getting bogus calls.