Recently we did an interview with Yale Hamrick; a North Texas investor who recently made over $50k in profits from a property he bought for only $112,000. This case study is rather short and gets right into the details of why he chose this property to rehab, the numbers, and what he would have done differently.
Who is Yale?
Let’s first start off with learning a little more about Yale. He has been involved in many facets of investing since 2007, from mortgage financing to importing construction materials. So making the transition to a full time real estate investor, he had a rather good understanding of the business and what products he will be working with on a daily basis. He made the jump to a full time real estate investor in 2012 and has never looked back!
Now, let’s talk about the deal. Yale works mainly in North Texas and found himself with an opportunity to acquire a property in Rowlett Texas and jumped on it! He bought the property for $112,000 and financed it through private capital. However, before he bought the property, he definitely ran his numbers to make sure the deal would work.
“The more knowledge you have of the construction, financing, and over all idea of what things cost going in, that is very important as a new investor.”
After looking at the property, he estimated a renovation cost of around $70k and figured an ARV of $250k. With a purchase price of $112k, rehab cost of $70k, and a sales price of $250k, it was a no brainer for him to pull the trigger and lock up the deal, even though this deal was a little outside of his comfort zone. Yale normally likes to keep his sales price under $250k and for the property to be 2,000 sqft or smaller, but the numbers just made too much sense for him not to do it.
Now let’s get dirty. This house was definitely a hoarder house. Every single room was filled with junk to the ceiling! It took him four 30 yard and two 40 yard dumpsters just to clean out the property! This property needed everything; a $70k renovation is no small job. Yale repaired the foundation, put on a new roof and siding, and replaced the main plumbing throughout the house. He also put in all new duct work, new cabinets, tile, flooring, paint, sheetrock/texture, a new fence around the entire perimeter of the property and also re-bricked the entire front of the house! There were definitely more repairs, but I think you get the idea of how distressed this property was.
We know this deal was a home run, but as investors, we know there are always learning opportunities. For this particular deal, we asked Yale what he would have done differently. He told us he would have put more attention and focus on this project. He constantly has multiple projects going at once, but a $70k renovation requires a lot of oversight. If he would have put most of his attention on this project, he estimates that he would have completed it in half the time.
Either way, Yale’s exit strategy was perfect. He bought the property as a fix and flip and sold it within two days of being on the market. Even you can sell a hoarder house. Not every deal goes as planned, but this one went almost exactly as planned. Acquire. Rehab. Sell. Profit. It also helps that (shameless plug) he saved over $7k in profits by listing and selling on ListingSpark.
Yale got a little out of his comfort zone and did a costly renovation, on bigger house, and at the very top of his sales price. He was rewarded handsomely with a $57k profit, but even at that, he still learned some things along the way. We asked Yale, “are there any lessons that you would like to pass on to other investors out there”? His response was summed up in one simple quote. “In order to get gold you have to dig through dirt!”. We could not agree more Yale.
How long does it take to sell a house? Great question, complicated answer with a lot of variables. Are you selling as a For Sale By Owner? Listing the home with a Realtor on the…
When purchasing a home, not only is there a buyer and seller executing a contract, there is also a monetary consideration called earnest money that binds the agreement. How earnest money is handled can differ…
The ListingSpark Referral program is a great way to earn rewards simply by telling your friends about ListingSpark. Today, we’re excited to let you know that the referral program has been upgraded! You can now…