Amazing House-Flipping Opportunity in Pleasanton
Our new listing at 435 Del Sol Avenue in Pleasanton represents a fantastic opportunity for any contractor, handyman, or anyone who’s been binge-watching HGTV® shows and wants to try their hand at the “house flipping” craze. It’s a three-bedroom, two-bath house, built in 1975 in a quiet Pleasanton neighborhood. According to public record, the house is 1,514 square feet sitting on a 6,507 square foot lot.
The house itself seems pretty solid (our termite inspection shows approximately $7,700 in Section 1 repairs that need to be made), but it needs just about everything: new floors, new paint, new kitchen and bathrooms, new lighting, and new HVAC systems. The permit history indicates that the roof was replaced in 2007 and, according to the date on the front of it, the water heater was replaced in 2014.
DISCLAIMER: Nothing in the text of this article should be perceived as a representation, or a warranty, from our firm — whether expressed or implied. We are referring, here, to information provided by others; we have not, and will not, confirm its accuracy. We have not requested bids from any licensed contractors or lenders, and we are not licensed to provide them. All information should be regarded, at best, as a “guesstimate” and we offer no guarantees as to its accuracy. Potential buyers are strongly encouraged to conduct their own research, to perform their own analysis, and to arrive at satisfactory conclusions prior to writing an offer or removing any contingency.
AFTER-REHAB VALUE (Estimate):
We are estimating an After Rehab Value (ARV) of this property to be $950,000. We would estimate higher than that, but because the lot possesses a significant downslope that limits the backyard space to a deck off the kitchen and family room, we feel our ARV is reasonable for what buyers may be willing to pay for a home with a less-traditional backyard.
Inventory, and thus the ability to draw from comparable sales, is limited. Here are the comparable properties we used to draw from:
- 4425 Mirador Drive: originally listed for $1,049,000, reduced to $1,025,000, and sold for $1,025,000 on November 8th.
- 4341 Bevilacqua Court: originally listed for $1,063,000, reduced to $1,020,000, and sold for $953,000 on December 2nd.
- 902 Clinton Place: originally listed for $995,000, reduced to $949,888, and sold for $905,000 on December 12th.
Here is a map, which shows the location of each comparable as it relates to our listing, with our listing shown as the orange dot and the area we drew from in the blue, shaded area (Click for larger):
REHABILITATION BUDGET (Estimate):
Here is a preliminary budget (which we feel is on the conservative side) of what it would take to rehabilitate this property in a way that will maximize its appeal to potential home buyers:
- Paint: The house needs a complete interior and exterior paint job.
- Interior paint: $7K (includes scraping the popcorn ceilings)
- Exterior paint: $7K (We would guess less than this, but some walls are ~2 stories, the eves need to be scraped, and the whole house may need to be primed because the existing paint is so old.)
- Dry rot: The Termite Inspection shows <$8K in termite/dry rot repairs. There are rotten floors in both bathrooms, but those repairs should be easy to make once the bathrooms are gutted. According to the report, the rear deck is surprisingly sound with only $475 in "Surface Fungus" treatments needing to be made.
- Interior updates: To compete with other listings in the area, the whole house needs a once-over. The kitchen and bathrooms would have to be gutted, all floors replaced, and a complete set of new windows (11 windows and one slider) installed. Additionally, a good rehab would replace the HVAC (because it’s original) and all of the ducts because it’s unlikely that they would pass a pressure test. Here’s an estimated run-down on all of that, plus a few other things:
- Kitchen: $20K
- Bathrooms: $7K x 2 = $14K
- Windows: $17K
- Floors: $7/sq.’ x 1514 sq’ = $11K
- HVAC: $15K
- Lighting/electrical: $2500
- Landscape cleanup and new front yard: $4000
- Tree Demo (the tree in the front yard has roots that have grown invasively throughout and, in order to remedy the situation, the tree may need to come down): $7000
- Garage door replacement: $1200
- “Slush fund”: $10K;
- SUBTOTAL: $95,000
- Gutters: The roof is relatively new, but the gutters are trashed already. It looks like a tree branch hit the one on the front, and the rear has been so plugged with leaves that it has begun to rust. I would budget $750 for new gutters and downspouts.
- TOTAL: That makes the total rehab budget for 435 Del Sol Avenue $124,750 — let’s just say $125,000.
HOLDING AND SALE COSTS (Estimate):
Rehabbers who pay cash and work quickly can save a significant amount of money over the costs listed below. For this analysis, we’re using a six-month hold time; that’s four months to rehab, a 30-day marketing time, and a 30-day escrow.
$950,000 after-rehab sale price:
- $47,500 (5% commissions on a $950,000 sale)
- $1,045 (County Transfer Tax on sale)
- ~$30,000 holding costs (8% holding costs for six months if rehabber leverages with a 7% hard-money loan, adding 1% for property taxes and insurance)
- $6000 (title and escrow fees from acquisition transaction)
- $125,000 (total rehab budget)
- $210,000: Total costs after rehabbing property and selling for $950,000
FINAL NUMBERS (Estimate):
As mentioned above, rehabbers who pay cash and cut out the hard-money lender, and/or who perform a rehab in less than four months, can increase their potential profit significantly. Still, with the deal as structured above, here are the final numbers on how a flip could potentially play out:
- $950,000 – $210,000 = $740,000 (BREAK-EVEN POINT)
- $41,000 (POTENTIAL PROFIT)
- $740,000 – $41,000 = $699,000 (LIST PRICE)
Of course, our office is highly experienced in putting designs and plans like this together, and we would love to help you in any way we can through the process. We are equipped to act as your agent in your purchase, and would also love to be your listing broker to get you top-dollar when the time comes to sell the property on the back side of your flip!