Why We No Longer Renovate Houses and Make More Money Doing Deals
By Jill DeWit, Co-founder of House Academy
First let me start by saying, we have renovated houses. We bought several homes and renovated them to sell. One house we changed the design half way through the renovation since we decided to keep it and now rent it out. But at the end of the day we know what we do best; acquisitions.
To make good money renovating houses, one needs a solid team working around the clock on multiple renovations at the same time. They also need perfect assets, with no hidden surprises in the walls or foundation. They need workers to show up on time, every day, PLUS an unlimited expense budget and a strong stomach.
One of our best deals resulted in a profit of $45,000 and took 45 days for me to renovate. My partner, Steven Jack Butala, sourced the deal and started the process of renovating with a friend/deal partner. By day 3 of the friend/deal partner not showing up, Steven asked me to jump in and assist. It started with me ordering a dumpster and checking on contractors to the result of me completely taking charge of the entire project from design plans to staging. I moved walls, built a garage from a carport, moved doors and re-created the floor plan.
There were days that I would pack my lunch and be on site from 6am to 6pm. Even with the best contractor, that is what it takes. I would come home dirty, and tired. Although the project was completed on time and under budget, Steven hated writing all the micro checks required for every little item.
In the end, we made a nice return on the project but what we learned is that it kept us too busy to complete more deals. And that meant we were losing money.
We know how to find and buy undervalued properties and resell them for more – IN THEIR CURRENT CONDITION. In other words, we already have equity in the deal the day we buy the house.
That is the key. (And that is House Academy.)
How does this work?
We use data, direct mail, and our incredible team to complete deals fast and make it easy for our sellers.
The process goes like this:
1. Use data to pick an area to send offers (quite a few steps here)
2. Download property ownership data for desired area
3. Use Offers2Owners.com’s Smart Pricing Service to extract mass price details to calculate prices for MY offers
4. Send personalized, strategic offer letters to sellers via direct mail (also Offers2Owners.com)
5. Field inbound calls & returned signed offers to pick a SFR
6. Work directly with seller to complete purchase of SFR (We pay cash and acquire the asset.)
7. Immediately resell to local investors/flippers
In an area where houses sell for $300-400k, we typically make $25-80k without doing anything. Not even sweep.
Again, we are buying assets for less than they are worth in their current condition and our buyers are thrilled when they hear from us. In many areas it is getting harder to come by great deals and most flippers do not understand how to use data and direct mail to obtain deals directly from sellers. We make sure there is enough profit in the deal so when we resell to other investors, they are still getting an undervalued property. After they come in and complete their renovations, they can generate incredible returns.
Here is an example:
8536 E Sage Drive, Scottsdale, AZ 85250
Our Purchase price $302,000
Our Sale price $330,000
AFTER reno listed price: $535,000
Before After
We have grown our business to the point now where we can successfully buy/sell multiple of these each week.
As much fun as I had as a “designer” for a period, I much prefer doing these deals from the comfort of my air-conditioned office.