Fantastic “Flip” Opportunity in the Hayward Hills!

A little while ago, a homeowner reached out to us who has a house in the Hayward Hills. He was having trouble getting rent from his tenant, and that was a problem because he lives in Virginia. We assisted him through the long process of getting the tenant out, and then assessing the damage that had come from years of neglect in the owner’s absence. Initially, we had thought about helping this homeowner rehab the home, but he has decided to market the property as-is, which creates a great opportunity for someone else to build some “sweat equity.” Investors who flip properties will want to bring their contractors… there’s a lot to do!

The address is 27440 Fairview Drive in Hayward, CA. The house, built in 1965, is one of the original Fairview properties and on a large parcel which public records indicate is greater than two acres. It’s a four-bedroom, four bath home with 2946 square feet of living space (you’ll want to verify the living area size, since public records can be inaccurate). Three of the four bedrooms have ensuite bathrooms, and the space includes both formal and family areas. In the front is a VERY large garage that could likely house up to ten cars; there’s also a small, detached two-car garage on the property that would be great for storing jet skis or ATVs. In the back is a pool with a deep end and a diving board; it’s heated with solar panels that are on the roof with western exposure.

The house needs a lot of work. We are estimating it needs roughly $225,000 of rehab investment to bring it to its full market potential. Here’s how we arrived at that number:

• The roof of the garage is leaking, and some of the siding has been removed. In order to fix it, all of the rafters need to come off the garage and the damaged wood replaced. That will allow a new “hot mop” roof to be installed. We estimate that to be a $30,000 project.
• The house needs a new roof. We estimate that to be a $20,000 project.
• New cabinets and countertops in the kitchen and hall bath will likely run about $30,000.
• The kitchen needs new appliances. We would budget $6,000 here, but this would increase to roughly $12,000 if a built-in fridge is used. For this analysis, we will go with the $6,000 number.
• The pool likely needs new equipment, but it does not seem to be leaking. We would budget $15,000 for pool repairs.
• We would recommend a mix of carpet, tile and hardwood for floor replacement. In a 3,000 square foot house we would budget $15,000 for flooring with installation.
• This house will likely cost about $7,000 to paint the exterior and $5,000 to paint the interior. That makes for $12,000 for paint. Let’s round that up to $15,000 for good measure.
• The house needs new windows and sliding glass doors. We have a great, inexpensive window vendor who would probably charge around $12,000 for the windows, installed.
• The siding on the house is an inexpensive product that’s past its useful life. We would budget $20,000 for siding replacement, and work with our designers to see what they spec for maximum market value.
• There’s a dated rock fireplace in the formal living room. We would want to refinish that and, depending on the material selected, that could cost around $5,000.
• Aside from cabinets and flooring, all four bathrooms need a refresh. We would budget $3,000 each for three of the bathrooms and $10,000 to rearrange and remodel the master bath (the tub in the master is taking up a lot of space…). That’s $19,000, so we’ll round that number up to $20,000.
• We wouldn’t want to “go crazy” with lighting in this space, but you would likely want to have about $5,000 to spend on new light fixtures, wiring, new plugs and switches, and installation.
• You’ll likely have about $2,000 in damaged wood that needs to be replaced before you paint the exterior.
• You will want to install new yards in the front and back with new irrigation. We would budget $7,000 for this.
• That leaves about a $23,000 “cushion” for incidentals, which falls in line with the 10% budget we normally like to add in order to feel comfortable with a project of this size.

The current list price is $899,000 and, after rehab, we estimate this house to be worth $1,300,000. If an investor purchased this property at the list price and then puts $225,000 into it, they would be into it for $1,124,000. They will pay 5% commissions on the $1,300,000 sale, which is $65,000. Not budgeting closing costs, that leaves roughly $110,000 in profit for an investor.

IMPORTANT: We have not received formal bids on this project, and these numbers should be viewed as “guess-timates only.” We strongly suggest you become familiar with these numbers, and then do your own analysis, prior to removing your Inspection Contingency. Remember, too, that Lifestyle Real Estate Services is a brokerage, and not a General Contractor. You’ll want your contractor to review these numbers to verify we haven’t missed anything. In addition, houses of this size, scale and on this large a parcel are few and far between not only in Hayward, but in the entire East Bay. We recommend you become familiar with the comparable homes that have sold in this area to ensure you are comfortable with our “after-rehab” value. We can offer no guarantees with the information presented above.