Anatomy of the Grand Slam: How I Made $800,000 on One Flip

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Gurus say it all the time: “there is huge money to be made investing in real estate. It’s so easy, in fact, that anyone can do it, in their spare time, with no money.” Yeah, right! The lure of big profits is what motivated most of us to get into this business. The absence of big profits is what motivates many to give up.

If over 20 years in this business has taught me anything, it would be that it takes hard work, perseverance, and a lot of practice to get it right. Many people never get it right. The difference is successful investors never give up; they keep trying because they have the drive to survive and the willpower to achieve.

Perhaps you started out thinking that you have to hit a home run on every deal. You don’t. Baseball hall of famer Babe Ruth only hit a home run 8.5% of the time and he struck out 15.8% of the time! Here was the key to his success: on more than a third of his tries, he connected with the ball and got on base. Imagine how history would have to be re-written if he had quit after his first strike-out!

Real estate investing works the same way. If you can hit a lot of base hits, you will have a very successful career. Every one of those hits is a building block to your success. I know, because I’ve had the good fortune of several hundred real estate “at bats”, resulting in my share of base hits, home runs and strike-outs. But those deals, good or bad, built the foundation of my business, and without that knowledge and experience, I wouldn’t have been able to hit the elusive Grand Slam.

I hope that sharing with you what a Grand Slam looks like (to me—your opinion of what a Grand Slam is may differ) will help you recognize one when you see one, and keep you motivated to grow your business and expand your comfort zone. A deal like this won’t be your first deal, but if you don’t keep your head in the game, it ain’t gonna happen!

How to Estimate Rehab Costs!

Estimating rehab costs accurately can make or break your real estate business, and it takes years of experience for even the best rehabbers to master the art. However, you can expose yourself to less risk and get more accurate with your projections by learning how the pros think when estimating construction costs.

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Let’s Dissect the Deal!

In late 2010 I got a tip from my property manager that an REO apartment complex was on the market, had just fallen out of escrow, and the bank was anxious to unload it. This, by the way, is just one of the reasons why a good property manager can be worth their weight in gold. The asking price for the 54 unit complex was just reduced from $1,800,000 to $1,300,000. The previous buyer had been in contract somewhere near the original asking price.

After underwriting the financials, I concluded that the deal would only pencil at $800,000. I made the offer and it was quickly rejected. I tried to reason with the seller and explain that it was going to cost me $700,000 to fix up this property and my offer price was really all that the property was worth in its current condition. They wouldn’t budge, so I stood my ground and let this one go.

About a month later, I heard that the bank was becoming even more anxious. I called the broker and reminded him that I was still interested. The seller asked if I could increase my offer. “Sorry, I don’t bid against myself” I replied. A couple weeks later, the phone rings. We have a deal! I must admit, I wasn’t expecting that!

The property was just over 50% occupied when I took over. The empty apartments were in pretty bad shape, the exterior needed all new siding, wood trim, roofs, landscaping, repair of failed retaining walls, you name it, it needed it.

Financing the Grand Slam Flip

I financed the property with a $1,100,000 hard money loan and raised another $540,000 with a Reg. D private offering. The lender held back about $600,000 of the loan proceeds in a construction reserve account, to be distributed as the construction progressed. That left me $500K from the loan proceeds and $540K from the equity offering to close the deal and get started. Even though I had none of my own money in this deal, I cannot overemphasize that this financing structure is only possible with experience, relationships, and a track record (remember all of those base hits you are using as building blocks?). This is not the “no money down” strategy from Guru-Ville.

Within 12 months, the property’s brand name was changed, almost every apartment unit had been renovated inside, the exterior was completely renovated, picnic tables and BBQs installed, the landscaping was lush and green, and occupancy had risen from 55% to 97%.

The Results of the Grand Slam FliP

Rents increased from an average of $620 to $734, an 18% increase. After 3 months of stabilized income on the books, I listed the property for sale and within a month accepted an offer for $2,650,000. The property closed in December 2012. Start to finish, this flip took 22 months.

Here is what the numbers looked like:

Rental and Other Income



Property Management








Repairs / Maintenance




Contract Services




Property Taxes


Interest Expense


Total Expenses


Net Income



Property Purchase Price


Entity Formation


Acquisition Costs


Loan Fees




Interior Improvements


Exterior Improvements


Furniture & Fixtures


Landscape Rehab




Engineering and Permits


Total Property Basis



Sales Price


Sales Commission


Credit to buyer


Closing Costs


Net Sales Price


Less Total Property Basis


Plus Net Income from Ops


Total Net Profit



I wish I could say that the profit was all mine! Remember that I financed this deal without using any of my own money? The investors got a little over half of the profits. They received 185% of their initial investment back, making them a healthy 43% IRR. Sharing the profits is one of the sacrifices that we all must make when we want to get into bigger deals or grow our businesses beyond our own resources. I’m happy to share because part of something is better than all of nothing.

Three Key Takeaways for Your Business

  1. Not every deal has to be a home run to be successful. Many successful careers are dominated by base hits, and that builds the foundation you need to hit the elusive Grand Slam. Keep your head in the game, don’t ever give up, and you will hit one eventually.
  2. Some of the best deals come out of nowhere. Make sure that everyone you know, and everyone you work with, is aware of what you do. And use good property managers that have your best interests in mind!
  3. Unless you are an heir/heiress or imported money into your real estate business from another successful venture, private investors are critical to any growth strategy. Treat your investors well. Under-promise and over-deliver. Be honest and transparent, and communicate with them whether the news is good or bad. They will be there for you again when you need them.

Many investors hit some home runs, and once and a while, a Grand Slam. What is your favorite success story?

NOTE From the Editor: We interviewed Brian for the BiggerPockets Podcast and talked in more detail about the Home Run deal discussed in this post. Check it out here: BiggerPockets Radio Podcast 003: Getting Started in Real Estate and Raising Money with Brian Burke


About Author

Brian Burke

Brian Burke is President/CEO of Praxis Capital Inc, a vertically integrated real estate private equity investment firm. Praxis operates on multiple platforms, currently managing active syndications for the acquisition of multifamily, single family, and opportunistic residential assets in U.S. growth markets. Brian has acquired over $400 million in real estate over a 30-year real estate investment career, including over 2,500 multifamily units and more than 700 single-family homes, with the assistance of proprietary software that he wrote himself. Brian has subdivided land, built homes and constructed self-storage, but really prefers to reposition existing properties. As a recognized expert, Brian has been a frequent speaker at real estate forums and conferences and served as co-host and real estate expert on the Fox News Radio show The Best of Investing.


  1. Brian,

    I know you are not a guru, if you were you wouldn’t have mentioned that $800k did not go into your pocket.

    For the newbies, run from any guru who shows you checks from the title company as proof he is making big bucks. I have scanned each and every check received from title companies.
    The largest over $300k netted me $35k after everybody took their cut of the deal. Not a bad pay check for 2 months work and no money out of pocket, but not as Guru like if I claimed $300k for the same period.

    The best part is you were probably able to turn that whole neighborhood around with that one deal, from slum to beautiful property, and I am sure the quality of tenant was a boon to the neighborhood.

  2. Brian,

    This is truly inspiring. I’ve been so hard pressed at making every deal a homerun that I forgot about the importance of just getting on base. Thanks for reminding me and I’ll keep that in mind when continuing to chase my grandslam!

    I’ve already bookmarked this blog for those rainy days when I just get on base or worse – strike out.



    • Thanks for the comment, Glenn. Every deal you do gives you the experience you need to sell yourself to your sellers, brokers, lenders, and investors. To succeed on a big scale, it is critically important that you build and develop a track record. You have to become relevant. Four base hits equals one run scored. Keep it up!

  3. Jeff Brown

    Welcome, Brian. I learned this lesson the hard way. Kept making small to medium profits on the deals Dad and I found. Then finally we flipped a medical center and Boom! we did it finally. The big ones just happen. Great stuff, and again, welcome.

    • Thanks for the warm welcome, Jeff! I read your posts and really admire your writing style and your approach. I have learned three important lessons as the size of my projects have grown: 1. Big deals can produce big profits; 2. Big deals can lose huge money. 3. When you lose money on a deal, you really learn pay attention to the fundamentals and and you become a better investor…which sets you up for lesson #1.

  4. Boy I love this!

    1. Your experience, talent and relationships made this possible. Remember the quote from Godfather2? “Hyman Roth always makes money for his partners.”
    2. You weren’t greedy.
    3. You will get more opportunities because yo say what you mean and mean what you say.

    Could you in another post talk about the deals you have done in the past that allowed you to do this one? I can only imagine your success previously ALLOWED this great deal to happen.

    Well done!

    Brian Gibbons

  5. I’ve only discovered this site recently, but articles such as this are very inspiring and encouraging to someone like myself who has only recently begun the steps to investing and are may be a bit unsure how to take the first steps. I really see now how perseverance matters in this business. Wish I had a mentor like you!

    • Jerome, I joined BiggerPockets about six months ago, and I’m amazed at the content of this site. I only wish I had a resource like this when I was starting out in 1989. I’m glad you liked the article, just remember to manage your expectations. It takes a lot of hard work, and setbacks along the way, before you do a deal like this one. Unless you are extremely lucky, that is, but I’ve yet to see that happen with my own eyes!

    • Great question, Fred. If I were doing this deal again today, I’d get better financing. Our loan was 12.5% interest. When we bought this, it was the best loan we could find at the time. Credit for this type of deal is more available now, and I have more lending contacts, so next time I’ll have a better loan.

  6. Trevor Probandt on

    Thanks Brian, that is a great story. I loved the comment about not bidding against yourself. How did you disperse the draw on the construction phase? Also, did you rehab and lease the properties as they came online or do it by building with a 50% occupancy? Did you always have one size of unit available (one two bed, one three bed,etc) or was the unit mix consistent?

    Thanks for writing this. Your rate of return wasn’t too bad either. 🙂

  7. Thanks Trevor! I raised enough money from my investors to have significant capital reserves. I paid construction costs as billed, from those capital reserves. Then, when capital reserves were drawn down, I’d put in for a construction draw to bring the reserves back up. By that time, I had the paid invoices to support the draw. The nice thing is that my contractors didn’t have to wait for the lender’s disbursement to get paid! 🙂

    I started by rehabbing all of the vacant units, and leasing them up as they were finished. Meanwhile, the entire exterior was getting redone. Next, the occupied units were rehabbed as tenants turned over. A lot of them moved from old units to new units, then I upgraded the old unit and re-rented it. I usually had one or more of each unit type available at any given time, until the end when it was almost full!

  8. Brian: Great story, thanks for sharing. I especially liked the part where you told the bank you wouldn’t negotiate with yourself. Love your writing style on your blog, keeps the readers engaged; and it’s casual.

  9. Brian thanks for harping on getting those base hits, I am guilty of wanting to hit the homerun every single time, but you put it into prospective that it takes many base hits to get that elusive grand slam that we all crave. And thanks for being very honest about the overall net that went in your pocket, because from what I have seen from some of these gurus you would think that they make all of that $50,000 check that they show you, lol. All in all great information that we all should take away and never give up and keep swinging !!!!!

    • Perry, one of the reasons I decided to tell this story is my frustration, similar to yours, that TV shows and guru ads tout the difference between sales price and purchase price as “profit” (OK, some actually deduct the cost of rehab!). In this business, profit is the only thing that matters, not title company checks, not spreads, just what’s left when everything else is paid. I have nothing to sell, so I’m just keepin’ it real!

  10. Brian – Great project overview. I really enjoyed understanding the mechanics of how you identified the deal, structured the financing, managed the project and disbursed profits in the end. As a small investor in the “trying to hit base hits” phase, I also utilize a 50/50 profit share with my investors and was wondering if I was giving too much away, but now I feel vindicated that the approach doesn’t appear to be too “desperate” of a way to attract and reward investors. Looking forward to future material from you. Thanks again for the transparency in profiling your deal. Much appreciated.

    • Thanks Vito! I’m glad you found the information helpful. Choosing profit splits isn’t an act of desperation, rather it is an act of reacting to the market. Investors will want higher splits on riskier deals, and sponsors with thin track records, and they will accept lower splits when risks are lower, sponsors are seasoned, and concepts are proven.

  11. Great article, Brian. I have a few question about some of your numbers. At 54 units, an average of $723 monthly rental, and a 97% occupancy rate, I am seeing something closer to $455k in annual income, but you listed more than $723k in annual income, where is the extra money coming from?

    Also you listed expenses of $700k — was that the total for the 2 years you held it, or is that typical average annual expenses? If that’s not the annual expenses, what were the annual expenses? I just want to get an idea of what CAP rate the buyer ended up buying the property at.

    Thanks, and congrats on the homerun deal!

    • You’re math is correct, Will. Just before closing, the gross scheduled annual income was $475,860. For readers that are new to income property, gross scheduled income is the annual income from rent, not including “other income” and “economic vacancy” (vacancy, loss to lease, concessions, credit losses, and non-revenue units such as model units). Other income includes utility reimbursements, laundry/vending, late fees, pet fees, admin fees, etc.

      The $723K income reported in the article was the adjusted gross income for the entire 22 month hold period, in other words, the gross scheduled income minus economic vacancy, plus other income. Simplest way to put it, that is the amount of money actually deposited in the bank account during the time I owned the property.

      The listed expenses of $713K shown in the article is also for the entire hold period. Expenses are variable, however the annualized expenses for the 90 day period prior to closing was $221,171. The annualized adjusted gross income for the same period was $481,189. This leaves $260,018 of net operating income translating to a 9.8% cap rate at the sales price. This is misleading, however, because the new owner is certain to expect a reassessment of the property’s assessed value which will result in higher property taxes than I was paying. Thus, their cap rate is truly closer to the 8% mark.

    • Thanks Matt! I originally intended to hold it for 5 years. When people ask most real estate investors what they do for a living, most will say they flip houses, they are landlords, they develop land…I say that I am a private fund manager, and my objective is simply to maximize my investor’s return. I happen to use real estate as an asset class to achieve this objective. In this particular case, I could maximize my investor’s IRR with an early exit, then we can go back out and buy an even larger property, allowing them to enjoy that higher IRR for a longer time. No reason to clip coupons on this deal, we can clip larger coupons on the next one.

  12. Matt just asked my question. The whole time I read it, scrolling down, I thought “A golden goose! Refi out your HML and let it honk and lay eggs for a few years! It’s not like Austin’s peaking…is it? I only buy small 1-4 units, but I get them cheap and my rental returns are great and I’d certainly rather collect rents from them (and/or Lease Option deposits) than sell these golden geese!

    • Austin certainly isn’t peaking! I think it’s a great place to invest and I’ll buy there again, I’m sure. When I do, my “golden goose” will be triple the size of the first one. That means larger eggs so no one goes hungry.

  13. Thanks for Sharing that deal Brian. I mostly buy and rehab single families for rental and flips.
    I am working my way to apartments & this was great to see how you pulled off the big one.
    I will certainly look you up when that time comes.


  14. Thanks for the great post, Brian!

    I’m a 21 year-old college student set to graduate in May, and I’ve been waiting to close my first deal since high school. Aside from the fear associated with leaving my comfort zone, I definitely think that “trying to hit a grand slam” has been holding me back from just trying to get on base by completing a deal.

    I also really appreciated the way you went through your story and the detail you’ve provided in the comments section.

    Thanks again, and I look forward to reading more of your stories!

    P.S. Congrats on managing to combine my two greatest passions — real estate and baseball — into one post!

  15. Brian,

    I had lots of question for you but you already answered them in replying to other commenters so I’ll just say great post. This was for me was a great follow up to your podcast.

    You’re doing the kind of deals I would like to do. There is a real pride that comes when you know you helped your investors build wealth on your deals.

    • Thanks for the feedback, Ned. Helping my investors fulfill their investment objectives is not only a source of pride, it is the very reason my business exists. People often ask me what type of real estate investing that I do. The answer is whatever strategy can produce healthy returns and fulfill my company’s mission of recognizing opportunity and delivering results. Being able to help people in this way makes it enjoyable to get up in the morning and go to the office!

  16. how to get the financing with no money down to purchase 6 of these golden eggs all at once in the local Texas market not to sell after rehab but to keep to live in one unit and get the rest of the tenants to pay me rent aka i want to be the land lord owner new to rel estate deals. i want to get the funding to purchase a huge apartment complex down town Houston.. figure if your going to do a deal make your first one count for something right out of the gate, need a place to live and need some one to pay the bills im not getting any younger..

  17. Great post Brian! I am in Stockton trying to get involved n wholesaling, contract assigning, rehab flips. I keep running into people who swear they are ready to do something and then back out at the last minute. I have been an appraiser for 10 years and am looking to branch out. I love your honesty. Any tips?

  18. Thanks for your comment Fred. If people are backing out of your deals at the last minute, it probably means one of two things. 1. The deal isn’t a good deal, so you need to negotiate better deals or 2. The buyer isn’t the right buyer so you need to expand your buyer’s list to include buyers who are active in the business, have a track record, and do what they say they are going to do. Both of these are easier said than done, but I’m just telling it like it is!

  19. Luka Milicevic

    Thank you for the post, Brian. I listened to the podcast this week and was curious about the details of the grand slam flip.

    I have learned that you should only listen to people who tell you that real estate investing is hard, because anyone that tells you it’s easy is most likely selling you something. The point you mentioned about using none of your own money; I like how you followed it up with the fact that it took you many deals to be able to not use any of your own money. Something most people can’t grasp when it comes to “no money down”

    Anyways, I’m almost exclusively doing buy and hold, but at some point I might get into flipping.

    Great post and I appreciate all of your input on the site!

  20. Chinedu Michael Onuoha

    Great Post Brian and wonderful comments and answers from all!!
    I wonder why most last comments on BiggerPockets were made in 2015??
    Is there something wrong with 2016? Are people not active in REI in 2016? I am asking because am just about to start out. I hope am not getting in when the market has peaked and is therefore on a downward trend??

    Final questions Brian, if you had a site such as BiggerPockets with its wealth of information when you started out in 1989, what would you have done differently? What is your advise on Mentors? Are they necessary and how would you advice one goes about that? Did you have a mentor?

    • Brian Burke

      Chinedu, it’s an old article and it doesn’t rise to the focus as much as it did when first published, hence the lack of recent comments. Glad you found it though!

      If you are just getting started, I’d argue that you missed the big run-up and now you’ll see a different market ahead than what you’ve witnessed in the past. I don’t think we are are in a downward trend (although all real estate is local so some markets might be).

      Had I had access to a site like BP way back when I think I would have made fewer mistakes and grown my business faster. I’ll never know for sure, but one thing is certain…knowledge is power and BP is loaded with knowledge.

      I’ve never had a mentor in the definitive sense but I’ve followed the writings and teachings of a few knowledgeable people. That certainly helped to propel me but a personal mentor could also have pushed me to grow faster and make fewer mistakes.

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