Palm Springs

“If you don’t take risks, you’ll have a wasted soul.” - Drew Barrymore

If you’ve been a reader of Sitting Pretty for any length of time, then you know about the house we bought in Palm Springs to fix & flip. Here are the posts in sequence: Before & After, Reset Button, Nothing Negative and Pardon our Dust.

Here is the final installment. We sold it and I’m pleased to report that we closed escrow last Friday. Here is the final tally:

$613,000 Sales Price – July 2006
$475,000 Original Purchase Price – August 2005
$138,000 Subtotal

Minus Costs:
$75,000 Improvements (show before/after)
$31,000 Agent commissions
$32,000 Total Proceeds

The monthly carrying costs (mortgage, taxes, insurance, utilities) are not included in these numbers. If you factor in these then you can call it a “break-even” venture. But we used the house & pool on the weekends so we maximized our dollars and enjoyed the time in Palm Springs.

What did I learn from this experience?

1. You make money when you buy a house, not when you sell it.
2. Just do the minimum when it comes to renovations.
3. I’ve always been told: Don’t do business with friends. I disagree with this advice. You can do business with friends. Just pick the right friends. A joint venture can be tricky especially when it doesn’t pan out as planned. We remain good friends.
4. Many of the people tracking the housing bubble are disgruntled renters, some are downright mean, and I’m sure more that a few are disappointed that this experience didn’t turn out to be the blood bath they predicted.
5. Every investment has risks… you win some and you lose some. You learn from experience. I’ll be wiser the next time. And yes, there probably will be a next time.

And of course, you’ll hear about here or here!