Sold the 3.1M lake house in week nine because of the furniture

Closed last Friday on a dated 1990s lake property. Bought at 2.28M off a probate situation, put 520k into it, sold at 3.19M. Net after commissions, carry, and closing was a bit over 210k for me. Fourteen months from key to key.

The part I'd keep: I staged it fully furnished and priced the furniture into the list. Cost me 41k in rental and delivery over the hold. First two showings at the empty stage got nothing. The agent kept saying the buyer at this level can't picture it, they need to walk into a finished life. I thought that was agent talk until we restaged and had an offer in eleven days.

The part that nearly broke it: my carry was 24k a month all in, and I had budgeted eleven months total. I went fourteen. That's roughly 72k I did not plan for, and it came out of the profit line, not out of some reserve I was clever enough to have set aside. If I had gone to month twenty I would have been at breakeven and getting nervous calls.

Also the windows. Original aluminum frames, 38 openings, and the quote I used to underwrite was from a guy who never measured. Real number was 94k against my 61k allowance. Nobody buys a 3M house with fogged glass so there was no version where I skipped it.

For anyone new reading this: the profit looks big and it is real, but it is nine months of my money sitting still and one bad market quarter from being nothing.

5 replies

2bmoreno23AB1B

The 24k a month is the number that stopped me. What's actually in that? I'm starting from zero and I assumed carry meant the loan payment.

1kevin_lombardPG1BPRO5

So the furniture piece, I want to make sure I have it right. You paid 41k to rent furniture, and that was recovered because the house sold faster, so less carry? So the furniture basically bought you months. Is that how you thought about it before you spent it, or is that how it looks now that it sold?

2gregpowell66AG4BPRO8

38 aluminum openings underwritten off a quote from someone who never measured is the part I'd flag hardest, coming from the build side. On a 520k scope a 33k miss on one line is survivable. On a scope where four lines miss like that you're done. Did you re-bid the rest of the envelope after you found that one or did you just eat it and move on? Because usually a bid that sloppy isn't sloppy in only one place.

1chriswalton8CC1CPRO8

Whose money was in this? You said nine months of my money sitting still, so I'm reading that as all yours plus the acquisition loan, no outside equity. If you'd had a partner at say 20% for the extra cushion, does the 210k still look worth fourteen months?

1samantha_ruizAU4APRO6

quarry, the real point of your post is in the last line and I want to sit on it. I'm a few deals in on mainstream flips and the thing I keep hitting is exactly what you described, the timeline assumption doing all the work in the model. You went eleven to fourteen and lost 72k. That's a 34% miss on hold time and it cost you a third of your profit.

What I want to know is what your plan B was at month sixteen. Did you have a rent number for that house? A lot of luxury product doesn't rent at anything near carry, so the fallback everybody assumes exists sometimes doesn't.

Sold the 3.1M lake house in week nine because of the furniture

5 replies