HIgh End House Flip I Made Over $100,000 on

Most of the house flips I do involved properties on the low end of the market. I specialize in starter homes for a number of reasons.

There are more of them, which means more opportunity to get a good deal
There is more demand for them, which means I can sell them easier
Buyers are not as picky when buying a starter home
There are more financing options on the low end
I do not have to spend as much money on carrying costs, financing costs, repair costs, and selling costs.

Most of the houses I sell are in the $200,000 to $300,000 range, which is the low end in Northern Colorado. However, last year I flipped a house that ended up selling for $802,000. I made over $100,000 on it, but there were many crazy circumstances surrounding the house that allowed such a high profit. It is not something that can be repeated often!

How did I end up buying this flip?

The property was a foreclosure that had been for sale on HUBZU for many months. HUBZU auctions properties, but no one had bought this one because it was still occupied. The price was also a little high at $700,000. I kept my eye on the home as I loved to buy houses from HUBZU, but was not super interested in it. It was out of my normal purchase price range, and not an amazing deal.

Then HUBZU changed the price to $600,000. The huge price change got my attention and I saw the opening bid was $460,000. There opening bids may not meet the reserve, but it still gives you a chance to negotiate with them. I bid the minimum bid knowing the houses was a steal at $460,000 and that I could get out of the contract if I really wanted to. Surprisingly no one else bid on the house.

HUBZU did not accept my bid of $460,000, but they countered at $500,000 plus the buyers premium of $35,000. I agreed and knew I had a few days before I submitted my earnest money. I went to check out the house and that is when things got crazy.

The houses was occupied by the former tenants and they claimed they had a ten year lease that expired in 2 years. I could see inside the house a little and it looked to be in great shape. The tenants claimed the bank had tried to sue them twice to get them out, and they were not leaving. I had a decision to make. Continue with the purchase and hope the tenants were lying or I could get them out, or cancel. Just about everyone I knew told me to cancel, I bought it.

How crazy were the tenants in this property?

So the title company could not find any court case on the lawsuit about the tenants or the ten year lease. I was sure they were lying and I could get them out of the property through an eviction. I would rather not evict them since they could destroy the house. I was willing to pay them to leave.

After doing more research we found the following:

The tenants husband was in prison for 7 years for defrauding seniors
The owner of the home was owned by the tenants uncle who died 3 years earlier
The lease was with the deceased uncle
There was actually a lease for ten years at $2,200 a month, which is crazy low
The tenant was super nice to me in person, but threatened me with lawsuits and said I harassed her every time I called.

It turns out there really were two lawsuite filed by the bank to get them out and the bank lost both! With a ten year lease to the uncle with low rent, it should have been ruled invalid, but it was not.

What did I end up doing to get the tenant out?

After months of arguing, talking with my lawyers, and threats we reached an agreement. She had asked for $100,000 to move out, which was not happening. I would wait out the lease instead of pay that. Eventually I paid for her to have a lawyer ($500) and have my lawyer negotiate the buy out. I paid her $20,000 to move out. She got paid once she was out and I could move on!!!

In the end I made $130,000 on the deal after some repairs, carrying costs and selling costs. It was a long process, and stressful , but it worked out. Below you can see the before and after videos.