Rehab Recap Season 1, Episode 1 – Watch on YouTube
Introduction
In this video series, I interview local fix and flip investors on their latest project. In episode one, we’re introduced to Alex and Delila’s first flip project! This article has some extra content that isn’t in the video. However, you can still watch it on my YouTube channel!
This series isn’t your typical HGTV flipping show. It’s meant to be more of an educational resource for others like myself who would like to learn more about the nitty gritty details behind flipping a house.
Is it perfect? Nope. As a matter of fact, there are already a ton of improvements that I can think of after shooting all of season one. However, I’m always open to more feedback! Please shoot me a message via my contact form or leave a comment on the video itself. I’ll do my best to make sure future seasons will be better than season one.
And of course, make sure you like and subscribe to my YouTube channel or subscribe to my newsletter below!
With that, let’s get into this week’s episode!
Meet the Investors
Alex and Delila live in Honolulu and opened their real estate investing business in June 2018, seeking to help others, their community, and gain time-freedom.
Alex and Delila both love traveling and being outside in nature. You can regularly find Alex hiking in the mountains and Delila catching waves on her longboard. Together they make the Mauka and Makai pillars of Catalyst Home Solutions.
Alex has a Masters of Business Administration and works full time for a non-profit as an accountant/housing specialist. Delila has a Masters of Arts Degree and works as Home Health Occupational Therapist.
Both Alex and Delila are also full-time real estate investors who plan on buying, renovating and reselling at least more 6 properties throughout 2019.
Find them at their website at https://www.chs-hawaii.com/!
Ewa Beach Surf House
Quick Details
- Living Space: 1,064 sqft
- Lot: 4,043 sqft
- Two bedrooms, two bathrooms (one on each floor).
- Right on the beach with perfect views of downtown Waikiki/Diamond Head as well as gorgeous sunset views.
- See their listing at: https://teamksquared.com/for-sale/91-127-ewa-beach-96706/ewa/201907596/
- Virtual tour available at https://vtour.smarttour.co/tour_1791/
Property Walkthrough
Watch the full episode on YouTube!
Investor Interview
How did you find this property?
Delila’s friend recently became a realtor and presented the property to the couple! This property was actually listed on the MLS for over 240 days. The realtor needed help and the couple brought on a second, more experienced realtor to help close the deal.
How much did you acquire the property for?
Listed at $740k, the couple offered $640k, and accepted the seller’s counter offer of $695k! Funding was done through a combination of hard money and private money lenders.
How much was the rehab?
Alex and Delila originally budgeted $200k for their rehab. They planned on making some massive changes by converting the two bedroom, two bathroom duplex into a three bed room, three bathroom home with a new garage. This would have raised their ARV up over $1 million! However, Hawaii’s shoreline setback rules prevented them from any kind of new construction within 40 feet of the shoreline. So they had to scrap their grand construction plans and plan for a renovation of the current structure instead.
Although this brought their budget down to $113k, with an actual rehab spend of $136k, the ARV took a hit and is now below $1 million.
Shoreline setback line.
Revised Ordinances of Honolulu 23-1.4
(a) General Rule. Except as otherwise provided in this section, the shoreline setback line shall be established 40 feet inland from the certified shoreline.
How much do you expect to sell for?
The property was originally listed at $999,999. However, the current list price is at $899k. This brings their profit margin down to approximately $68k, not including buying/selling costs, interest on loans, and actual sale amount.
What was the biggest lesson you learned on this flip?
Due diligence! Alex and Delila started on the property thinking they could raise the value of the home by building a garage and converting it into a three bedroom, three bathroom single family home. With a potential ARV of $1.15m, they had plenty of room to make all those changes. However, after discovering the shoreline setback rules, they had to completely change their plans.
Did this stop them from continuing? Obviously not. They came up with another plan and executed.
BONUS LESSON!
Work with experienced team members. When you work with experienced realtors, you get to tap into their network. This was Alex and Delila’s first flip, so having an experienced realtor helped out immensely and greatly contributed to their success.
Conclusion
I think Alex and Delila did a wonderful job on renovating this beach house. Yes, they ran into a big issue that made them to completely rethink their strategy; and yes, the house is still on the market after a price reduction. But keep in mind that this was their first project. In the end, they’re still set to break even, if not profit a little. The value in the lessons learned on their first project? Priceless.
Make sure to head over to Alex and Delila’s website to see what they’re up to now!
What was your first house flip like? Head over to the video and share your story in the comments!
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