Condos #2 & #3 are sold!

Finally, my sale has closed. Here is the story on them. I put them on the market in December at $175k and $168k. The reason I did this is because one condo was remodelled and the other one was not. I figured a $7k discount was fair for an unremodelled small kitchen and old carpet. I had the $168k condo listed as a fixer upper with a tenant through Nov. 2006.

Within the first week I got an offer on both for $160k each with no inspection or contigencies. I probably should have taken that $160k on the $168k condo, but I didn’t because it was the first week. Of course we have all heard of the saying that your first offer is probably the best offer. I countered both prices by lowering my price $2k on each condo. The buyer rejected it.

I went through the holidays with no offers but alot of inquiries. My realtor said that most people were interested in the fixer upper and that most buyers wanted a deal. Meaning that they expected to be able to knock down the price of a fixer upper rather than pay close to asking. Therefore, we decided to raise the price of the fixer from $168k to $174k. This would allow me more room to negotiate my price down.

Fast forward to March… There were many showings on both condos, sometimes as many as 3 per day, but no offers. Then one day my realtor calls and tells me, I got two FULL price offers on your condos. Yeah right, she’s messing with me. Well, I get the offers and what else could I do but sign them!

Getting full price offers after 100 days on the market is very strange. I did not believe that my buyers were serious. Then I found out that they were from California and had never even seen the condos! This made me even more skeptical. The next weekend the buyers were coming into town to view the condos. My realtor had found out that they are doing a 1031 exchange and that they also have contract on another condo, which they will look at this weekend also. So basically what I heard is, they are going to look at the condos that they have under contract and pick which one they want to buy.

Well, they came and went and I just waited for the inspection report. My first worry is that they didn’t want my condos and would outright cancel their contract. I figure I had a 50/50 chance here. If they did want my condos, I was prepared for the price reduction due to the inspections. I was predicting a huge list of items and a price reduction in the fixer and pretty much no items in the remodelled one. As you all know the list turned out to be very minimal and I agreed to fix everything I could. The odd thing is that they never came back to do a final walkthrough to make sure I did fix everything (even though I did).

Final numbers:
Condo #2
Purchase price $73,250
Closing costs $3,000
Cashflow (21 months) $3900
Sold price $174,000
REI commissions/closing $13,000
Profit (21 months) $89,150

Condo #3
Purchase price $73,250
Closing costs $3,000
Cashflow (8 months) $1500
Remodel costs $5,000
Sold price $175,000
REI commissions/closing $13,000
Profit (21 months) $82,250

Total – $171,400
Taxes – about $34,000

After tax profit – $137,400

About Kenric

My blog about living life to the fullest by generating passive income through real estate, business and online investments.
This entry was posted in Real Estate. Bookmark the permalink.