Teen Momtrepreneur Farrah Abraham has been talking about getting into the house flipping game for a long time, and back in April she gave every indication that her recent Hollywood Hills townhouse purchase would be her first flip. That appears to be the case as Farrah recently relisted the revamped property for $899,995. It is also listed as a potential rental for $6,200 a month, which includes the priceless bonus of having Farrah as your landlord!
In case you missed it, we first reported on the property back in early March, when Farrah and her boyfriend Simon Saran were photographed together checking out the listing with an MTV camera crew in tow. (Or at least I assume it was MTV — Farrah has hinted numerous times at a potential house flipping reality show of her own, so perhaps it could have been a different crew filming for the pilot?)
According to online records, Farrah purchased the town house for $845,000, which was more than $24,000 less than the $869,900 asking price at the time. As we mentioned in our initial post about the property, it didn’t seem like a great candidate for flipping because it had been on the market for months, and the price had continued to drop over that time. It was initially listed for $949,000 in October of 2015, and that price was lowered to $899,900 in November, and then $869,900 in early February. Judging from the photos in the listing, the 2,700 square foot home looked to be in great shape — far from a “fixer upper” — so that info, combined with the sale price seemingly being lowered until it met market demand, wouldn’t suggest there was a lot of potential for profit on a flip.
But I’m not Farrah Abraham! After completing a good deal of work on the home, including interior and exterior paint as well as all new furnishing, Farrah has bumped up the price more than $54,000! Here’s the description of the property from the sales listing:
MUST SEE! Beautiful townhouse located in Hollywood Hills. Open and spacious floorpan. Kitchen flow is nice and open to the living area. One of the best designed units ever built! Recently replaced the floors, carpet and paint. Brand new appliances.This boast over 2700 sqft of living space and is conveniently located near the 101 and 134 freeways. This unit consist of 4 bedrooms and 4 bathroom. It is modern, and only has two units in the complex. Motorized gate was just added along for extra security. Unit can be sold furnished! Furnishings are brand new as well. This unit has it all! Perfectly located between Hollywood, Universal Studios, Hollywood Hills, and studio city! Come take a look at it today.
Here are a couple before-and-after photos of the living room and kitchen for comparison:
And here is the exterior — you can tell Farrah altered the color scheme a bit:
The property was listed for sale about a week and a half ago, but prior to that, it was listed for rent for $6,200 a month. The description for the rental listing was a little longer with some more info, so I thought I would include that as well. (I love that Farrah uses the fact that TV filming took place here to help sell it, and she adds “This owner really shows you hospitality!”)
2012 Hollywood Hills Town House, All NEW Floors, carpet, paint,window treatments, woodwork renovated. Added Gate & Camera’s for security. This sought after location is no stranger to celebrities renting this home and used for many new productions on tv! since this is up the hill from all the largest studios.This is a must see!
Gated back court yard and private walk way. This home comes furnished! all you need to add is your finishing touch! New beds, couches, dinning table & 2016 Massage chair of the year to compliment with 2016 zero gravity massage chair. This owner really shows you hospitality! The new appliances like the washer, dryer, microwave and refrigerator even has wifi to track your food. 3 car garage, 4 bedrooms and 4 bathrooms MOVE IN READY.
This Town House has a wonderful outlook into the hollywood hills country club drive. The new window finishing compliment the home adding privacy and allowing in the sunshine. This home has a hint of hollywood with autographed signed artwork by some of hollywoods most famous. This must see has everything you need, via living in the best location in LA and also with in the cozy and spacious home that is very clean.
Owner pays only trash, sewer. Tenant pays water, electricity, cable, and other utilities used by tenant.
I recently purchased my first home and I was astonished by all of the fees that get tacked on for the buyer and subtracted from the seller! The experience made me realize that house flipping is a deceptive and potentially dangerous game when you are only looking at the purchase and resell prices of the house. I decided I would try to crunch the numbers on Farrah’s property to get a rough estimate of what kind of potential profit she was looking at.
As far as Farrah purchasing the property, I ran a closing costs calculator on a $845,000 home in the correct zip code with a 20% down payment and came up with approximately $14,000. Obviously, that number would be reduced if Farrah paid cash, but even given her numerous successes over the last couple of years, I don’t think she has a million dollars to drop on a flipper house — especially since she was unable to sell her house near Austin. (It’s my understanding that she is currently renting that property.)
Even if the list of work she had done on the house was short, just painting and other minor alterations would be at least $5,000 more. (AT LEAST should be in capital letters there.)
So, effectively, Farrah has to make back roughly $864,000 to break even. (Again, I believe this estimate is low.)
Next, I ran a seller’s net sheet for the same zip code with a sale price of $899,900. If you’ve ever sold a home, then you know the single biggest expense is for the realtors involved. The standard arrangement is that the agents for the seller and the buyer each receive 3% of the final sale price — which is HUGE when you’re talking about a $900,000 property! (There’s a reason Bravo has all those million dollar real estate agent shows!) If you weren’t able to do the math quickly in your head, that would mean that the realtors in this transaction would receive a total of $54,000. (I came up with that number about an hour ago, and when I just typed it I was still astonished.)
BUT, according to information online, Farrah’s boyfriend Simon Saran is a licensed real estate agent — so if he sells the home, then that 3% would stay in the #Farran column. According to MLS, the listing agent on the property is Alex Dolginov of Dolan Realty Company. And according to the San Diego realtors’ website, Simon Saran is a “Realtor with Dolan Realty Company,” so I think it is safe to assume that Simon is handling the realtor duties. (The way it works is that all licensed real estate agents have to work for a real estate broker, which requires more training and education. Simon is a real estate agent and Dolgen is a real estate broker.) On a side note, it’s my understanding that if the seller’s or buyer’s agent is related to the seller, then they have to disclose that fact. I’m not sure how that works with boyfriends?
Here is a breakdown of the cost of selling the home, including one figure for having a selling agent, and another without:
With two real estate agents: $63,000
With one real estate agent: $36,000
So, the best case scenario is Farrah will receive $863,900 if she sells the property for list price and only has to pay the buyer’s agent. (Remember, the property was listed for that same price for three months late last year and early this year without a buyer.)
With those numbers, Farrah stands to lose $100. Please remember: I am just an amateur first time home owner! Still, there are some basic mathematical facts here that would suggest Farrah isn’t going to make a ton of money on this first flip. Of course, as Simon tweeted just a few days ago, “First house is always the hardest. After that it’s a numbers game!” And it’s also important to remember that if Farrah lands a house flipping reality show out of this, that the value of that was CLEARLY not included in my calculations!
I just looked at the clock and realized how much time I spent on this post. I swear, keeping up with Farrah is WAAYYY more than a full-time job y’all!
(Original Farrah photo: Jen Lowery / Splash News)