Armando Montelongo | News and Information In Real Estate

A tax sale property can offer good opportunities for house flippers, but it can carry a lot of risk too.

Take Scott and Katie for example. They were able to purchase a house on a tax sale for $12,000. They’re putting in $38,000 worth of work and estimate they’ll sell the renovated house for $130,000. That’s $60,000 of profits.

In this video, the couple shares what repairs they plan and walk Armando through the property.

Scott and Katie are former students of Armando’s and have been successful. But Armando cautions that any other would-be investors need to know what they’re doing.

After all, investors who don’t know exactly what they’re doing can lose a lot of money on a tax sale, too.

What they’re fixing

Scott and Katie are going to fix:

The Kitchen: It’s getting a total revamp, with new cabinets, new flooring, new walls, new paint, new granite countertops and a new drop-in sink. Armando points out that drop-in-sinks really give kitchens a detail that spices up the house very nicely.

As far as cabinets go, “buyers are looking for new, not used” Katie says.

Master bedroom: Scott and Katie are repainting the walls a neutral color instead of the existing seafoam green paint with all kinds of sea creature paintings that aim to give the master bedroom an aquarium look. They’re also rotating an air conditioning unit from the master bedroom to a closet facing the hallway, knocking down a wall and removing a Dutch door. That room will also get electrical work and new flooring.

Garage: The most outrageous part of this house is in the garage that was turned into a bedroom. It includes an outhouse. No sink, no light, just an old toilet with plumbing enclosed inside of a wooden structure with a door.

As Armando describes it: “If this is a mother-in-law suite, it’s the worst mother-in-law suite I’ve ever seen!”

Of course, the outhouse is going and the couple will convert the space back into a functional garage.

Experienced flippers

These investors in Dallas have flipped 22 properties this year alone. In the first house that Scott and Katie flipped, the recounted how they bought it for $42,000, put in about $41,000 and sold it for $188,000. It lasted only 30 minutes on the market and even had backup offers.

Check out the house, meet a door-to-door meat salesman and stick around for a very sweet ending.

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