Rehab Recap Season 1, Episode 3 – Watch on YouTube
Introduction
Welcome to another episode of Rehab Recap! In this episode, we’re with Oahu’s biggest house flipper, Michael Mazzella. The house we’re looking at today was an old three bedroom, one bathroom home that was converted into a five bedroom, four bathroom home! Perfect for a large family, or the savvy investor looking to get extra rental income.
If you like this series, make sure to subscribe to my YouTube channel or simply sign up for my newsletter below.
Meet the Investor
Michael Mazzella has been flipping homes on Oahu for over 17 years now! The property we’re looking at today is his 247th flip with many more also in the works.
Michael has an impressive background with Army Special Forces with both jump and scuba certifications. He eventually became an Infantry Officer, graduated from US Army Ranger School, and held various billets such as Operations Officer, Personnel Officer, and an Infantry Company Commander.
Check out the interview my buddy David Pere did with Michael on his podcast!
After kicking butt in the military, Michael worked a regular “W-2 job” as an HR consultant. The pay was great, but nothing compared to the check he received after flipping his first home with a couple of his friends. Seeing the potential in real estate investing, Michael quit his full-time job and started flipping homes with an average profit margin of $100,000+ each!
Over the years, Michael started a mentorship program where he teaches everything he knows about real estate investing. The primary focus is on flipping homes, but the program also dives into building passive income through rental properties.
Learn more about Michael and his mentorship program by visiting his website, honolulumentor.com!
Haleiwa House Flip
Quick Details
- Living Space: 2,100+ sqft
- Lot: 13,000 sqft
- Main House: Three Bedrooms, Two Bathrooms
- Unit 1: One Bedroom, One Bathroom
- Unit 2: One Bedroom, One Bathroom
- Perfect home for a large, multi-generational family or for the savvy investor looking to generate additional income by renting out the other two units.
- Just a quick walk away from the beach!
Property Walkthrough
Watch the Full Episode on YouTube!
Investor Interview
How did you find this property?
The MLS! This property was sitting on the market for nine months before Michael was able to pick it up for the price that worked for him.
Fun Fact: The realtor that found this property was actually Kina Knisley! We featured her and her $1m+ triplex flip last week. Check it out here!
How much did acquire the property for?
Originally listed at $1.05m, the property was purchased at $950k.
How much was the rehab?
The budget was set at $120k, but a $3k credit was given to the buyer in order to fix the motor on the front gate. Thankfully, Michael always adds a 10% buffer to his rehab budget for unforeseen events such as this so this was no big deal for him.
How much do you expect to sell for?
The house actually already sold for $1.3m before the house was even completed! Michael’s friend was looking to buy a home on Oahu that had extra rooms he could rent out to help off-set his mortgage costs. After walking through the property mid-flip, his friend asked if he could buy it! The two agreed on a final price and went ahead and went into escrow with months of work still left to do.
After all holding costs, commissions, and other fees, Michael earned a pre-tax net profit of $135k.
What was the biggest lesson you learned on this flip?
Don’t get comfortable with contractors. Sound familiar? Kina and Josh had the same problem with their flip! Just goes to show that no matter how experienced you are, you will still run into some sort of problem.
Michael mentions that he got comfortable with using the same contractor for all of his projects. But just because you’re comfortable with them doesn’t mean you should allow your vendors to make mistakes.
You always need to hold that ability to hire and fire people off your power team.
Michael Mazzella
Conclusion
Michael is an experienced investor and knows how to squeeze the most value out of the properties he invests in. This project was no joke. The original home was a three bedroom, ONE bathroom house. How inconvenient does that sound? By adding another full bathroom to the main house, the house already had increased in value. In addition, he converted a garage into a separate one bedroom, one bathroom unit; as well as converting the covered patio into another separate one bedroom, one bathroom unit. If he had kept the original house and just did a basic cosmetic renovation, then this project would have lost him money.
What lengths did you go to in order to get the most value out of your previous flips? What things are you planning now on your current flip projects? Let us know in the comments of the video!
Subscribe to be notified of the next episode’s release!
Did you enjoy this week’s episode? Be sure to enter in your email below and I’ll send the next episode to you as soon as it comes out!