My rehab + flip of house with a new partner in Philadelphia

I purchased a property on Newtown Ave in the northeast section of Philadelphia in August 2004 with Jake Komar's National Properties Group.

Jake located and recommended the property. The deal was that I put up the cash, and we split the ownership 50/50. Upon sale, I would receive all of my capital outlay back, and we would split the profit evenly. Jake gave me a description of the property, its purchase price, estimated repair work, and target sale price. He provided comps. These numbers were: Purchase price: 42,000. Comps on the block $70-75K. Optional rehab 5-8K

According to Jake, we were able to buy it so cheap because the owner had moved away (and perhaps died). It had been vacant for two years. We were buying below market because we had located a motivated seller in a distressed situation. Most of the houses in the area and on the street look exactly the same. It is a populated, mixed race area, and mostly owner-occupied.

Jake told me that the house would probably sell for 65-70 as is, or we could put 5-8K into it to clean it up and rehab the inside, and sell it for 75-85. The house is a row house in the middle of a row of similar houses (see photo) It needed to be cleaned out, and the large backyard needed clearing. This was done by the seller. The house is structurally fine, and great looking from outside. Inside it was pretty worn and old looking inside cosmetically, with old and outdated fixtures, toilet, kitchen, wall coverings, flooring.

We took possession and put it onto the market with very little work. Jake marketed the property through his network of buyers, and advertised it in newspaper. He held an open house. We received several offers in the $55K range - not what wanted and not enough. (though it was a validation that this property is a money maker not a money loser) We decided to do the repair work inside the house (mostly cosmetic) and install new kitchen, bathroom, paint the inside, fix up the roof, repair floors, etc. Jake and his crew do all the rehab work. Estimated costs 5-8 grand. We are in the process of doing that now (as of October 2004) and hope to have it back on the market by end of month, with target sale price in the 80s. I will update this post as we attempt to sell again. If the deal works as planned, we will split a 30-35,000 profit after a 3-4 month hold period.

UPDATED May 2005: This property was sold! We had a slow Christmas season. We were unable to sell the property ourselves, so put it on MLS. This would cut into our profit, but make it much easier to sell. Relatively quickly we received a full price offer of $89,000. It was put under contract in March, and I had the funds in my account in April. My final numbers were: Cash laid out: $57K Cash received: $69K My Profit: $12K My Return = 21% Time frame: 8 months During the whole process I was very happy with Jake’s work, and felt comfortable the whole time that I was getting enough information from him about what was going on. I have subsequently done several more deals with Jake.

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RE: My rehab + flip of house with a new partner in 2008-07-18 16:30:00
   Joseph, are you still involved in deals with Jake? Are you still happy with Jake's results? Please update the group with current information, as this post is from quite a while ago. I myself am involved in two deals with Jake. I entered into the first deal with him approximately 2 years and 9 months ago. The project was a rehab deal of four residential homes that were to be rehabbed and up and running in approximately six months time and then rented out for cashflow. After 2 years and 6 months, just two of the four properties are rehabbed and our group has not had any cashflow distributions or return of profits of any kind throughout the existence of the partnership. I entered into my second deal with Jake after a few months of the initial partnership, when Jake sent estimates that the first investment had gone up in value. This new investment was the purchase of a commercial mixed use property, purchased all in cash--a storefront on the bottom floor and an apartment on the top floor. The property was estimated to be rented and cashflowing within six months, where at that time we could refinance the property and I could pull out a significant amount of my cash investment. It took more than a year for the property to be fully rented and there has been no refinance on the property as of yet, although I have been requesting for this to be done for months. I have only received one small cashflow distribution for this property throughout the existence of this partnership. It would be great to hear others' experiences with Jake and a current update from Joseph. Best regards, James - James Mack