Buying & Selling Houses

How I Made $26K on 1 Property Thanks to My Father’s Advice

6 Articles Written

Have you ever felt lucky that your parents taught you something? For me, that luck was my father teaching me from the school of hard knocks. The introduction course? Practical Sense 101.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

Even though I didn’t enjoy it at the time, my father would bring me around the house as things broke down. From plumbing to pools to drywall to tile, he always had an attitude of fixing it himself.

That has always been my attitude—until recently when I decided to start investing in multifamily apartments. I realized that it’s nearly impossible to do all the work yourself. But my first four single family rehabs were hands-on.

Tapping into the handyman experience I learned from my dad, I was able to make $26,000 on one simple property. I want to share that story here.

But before we get into it, let’s take a look at the numbers.

Single Family Real Estate Deal by the Numbers

  • Purchase Price: $100,600.00
  • As-Is Value Appraisal: $146,000.00
  • ARV Appraisal: $187,000.00
  • Repair Budget: $10,371.76

Cashing in on Sweat Equity

With this property, I did it all—refinishing hardwood floors, drywall, painting, baseboard, crown molding, trim work, interior and exterior doors, glass repair, remodeling the kitchen, tile work, toilets, vanities, lights, windows, brick/patio work, removing trees, and everything in between. I’ve got a pair of lucky LL Bean jeans and boots that are covered in hours of hard work.

Related: The #1 Money-Saving DIY Skill Every Rehabber Should Learn

There is something to be said about learning from doing, and I’m truly blessed that I have that ability to figure things out. I’ll admit, it can be hard at times. This is especially true when you build a built-in breakfast nook and assume two-by-fours are actually measured 2 inches by 4 inches…

You should have seen the scrap pile. 😉

Looking for Potential


But as I progress in my investing career, the things my father has taught me are invaluable to the process of buying real estate. When I walk through a property now, I don't notice the paint color or the make and model of the appliances. I look at quality of work, construction materials, and whether the property has potential.

My father taught me to have an eye and focus on the final product. All his teachings work through me in every deal.

The most important factors were to buy right and buy something with potential. So, when walking through this project, I saw the end product and not the foreclosed mess that was left behind.

And by doing the work myself, I was able to save on construction costs. The material cost was $10,371.76. If I had hired it out, the labor would have added another $10K to $15K.

Yes, it still would be a profitable investment but not as much as paying myself over $26,000 at the time of the refinance.

Acknowledging It’s Not Magic

The title of the article sounds like a sales pitch, right? Like I have some magic seven-step process or secrets of the trade. And for only $997, you can have them, too!

No way! I just want to show you how I completed this deal.

The only magic comes in the form of my three golden rules for investing:

  1. “Do what you’ll say and say what you’ll do.”
  2. “Protect your lender and yourself through buying right.”
  3. “Don’t get emotional.”

Buying the Property

When buying a foreclosure, you typically offer cash and take the property as-is. This leaves you with two struggles.

The first is that you must complete all your due diligence at the time of the walkthrough. This is where my father’s lessons have come in handy. However, I still like to get an expert’s opinion, because I am not a master in all fields.

The other struggle is the financing. Buying this property for $100,000 cash as a former teacher was a big problem. I didn’t have nearly that amount of money in savings. In fact, I actually had to borrow all of it and more.

In return, I gave my investors a return on their investment secured by the asset (first position for the purchase and second position for the rehab). Plus, it was also insured, just in case something catastrophic happened.

My total loan amount was around $117,000, which is 63 percent of the final value (ARV).

Closing and Beyond

Within an hour, I was in my boots and jeans, working on the exterior of the house. I believe it is important to start on the outside. The neighbors will thank for it, as well.

Related: 8 Simple Steps to Close Real Estate Deals Like a Rockstar

Typically, these houses haven’t been lived in for awhile, and the grass is knee-high. With just a lawn cut, tree/bush removal, power-washing, shutters, and mulch, you can truly make the property pop!

For the next 11 and a half days, I busted my butt, working around the clock. Work ethic was another thing I was grateful my father had taught me: “Early to rise, last one to leave.”

Rehabbing Process

Dirty pool sits unattended covered in leaves

The entire kitchen was outdated, but the cabinets were structurally sound. New cabinets cost around $3,600 for a 10-by-10 kitchen. I spent $40 on paint, $60 on new hardware, and $150 on countertops, and it took a day of labor.

The appliances were bought as a package deal for $2,200.

This was my second job refinishing hardwood floors. The hardwood on this property was about 700 square feet. In Connecticut, the cost to refinish floors is $2 per square foot. Of course, it depends on how bad they are and how many coats of poly you want.

For me, it cost around $50 to rent the floor sander and another $90 in materials like sand paper, rollers, and clear semi-gloss.

Pool removal was not one of my specialties either. So, I found some contractors who were in-between jobs. Total cost was around $3,500 with permits. This was, by far, an amazing deal for me. Other quotes came in around $5,500 to $7,500.

The reason I removed the pool was that the cost to keep it was far greater than removing it. Eventually, I will keep the house as a rental and didn’t want the liability and upkeep that comes along with pool ownership.

Cashing Out for $26,000+

Once I completed the rehab work, I put the property up for rent, while I waited for the seasoning requirements in Connecticut. Typically, lenders want to see a year of ownership before they will give you long-term debt on a house.

Once that year was up, I went to the bank to talk about getting 80 percent of the equity out. Here is where the magic happens, so follow closely:

  1. I bought if for $100,600.
  2. I had another $17,000 in rehab and holding costs.
  3. My tenants paid the carrying costs for the first year.
  4. I then went to a bank to do a cash-out refinance and told them I would like to pull some equity out (80% LTV).
  5. The house appraised for $185,000, which means a $148,000 loan (185,000 x 0.8=148,000).
  6. I paid my investors the $117,000 I owed them for borrowing the funds.
  7. I got to keep the rest, minus closing costs.
  8. This resulted in a $26,663 tax-free check!

I know I made it sound easy, but there were countless hours of reading books, attending investor meetups, and hands-on experience that made this deal possible. And with real estate, there is always risk.

But with the right amount of knowledge and experience, magic can happen.

Questions about the deal above? Comments? 

Let’s talk below in the comments. 

Scott Hollister is a real estate investor, lender, and licensed agent in central Connecticut. He began real estate investing in 2012 with a house hack after his parents lost their home in the reces...
Read more
    Brandon Rush Investor from Danbury, CT
    Replied 8 months ago
    Great article. Really appreciate you taking time out provide this level of detail. Congrats and best of luck going into 2020.
    Martez Wilson
    Replied 8 months ago
    Great article. Knowledge is power. Keep up the good work.
    Jeff Lamothe
    Replied 8 months ago
    Excellent article Scott.
    Patrick Onyenaka
    Replied 8 months ago
    This is very inspiring. Your step by step explanation left me with no questions.
    JayCinta Henry Investor from Mesquite, TX
    Replied 8 months ago
    This is a great replication of the BRRRR process. Well done and thanx for the detailed explanation.
    Matt Bailey Investor
    Replied 8 months ago
    How did the investors make money?
    Scott Hollister Rental Property Investor from Connecticut
    Replied 8 months ago
    The lenders? They made money off points and interest, around 14k total for a year hold. The investors made money multiple ways, once the rehab was finished, we collected rent for the entire year. When we refinanced, we pulled out some equity (26k). And we had 20% equity left in the deal (80% loan to value as a primary home). We also got to keep the asset, and now it is a cash flowing rental. And the cherry on top, before we moved out, was that we got a HELOC for 35k, allowing us to tap into the sitting equity and use for deals going forward.
    Bryan Drury Investor from Owensboro, Kentucky
    Replied 8 months ago
    Scott, great job implementing what your father taught you over the years. Your father deserves alot of credit for teaching a willing to learn son. The skills and knowledge he passed on to you will benefit you your entire life. Now pass it on to your kids or other young people that show interest. Good luck to you in the future.
    Scott Hollister Rental Property Investor from Connecticut
    Replied 8 months ago
    Bryan, I appreciate the kind words! Good luck to you as well
    Darryl Holmes Rental Property Investor from Indianapolis, IN
    Replied 8 months ago
    congrats on the deal.. Question how did the refinance impact your cash flow ? What’s the difference in the terms of the hard money loan versus your new refinance loan ? I am ready to do a similar refinance on a duplex I own but still have questions about this step.. Thanks in advance for any advise!
    Scott Hollister Rental Property Investor from Connecticut
    Replied 8 months ago
    Thanks Darryl. Cash remains about the same, slightly higher with hard money. Taxes and insurance are about the same, owner occupied insurance is $160 cheaper for the year. Hard money payment was $960 a month about(no principle pay down). Principle and interest on refinance is around $750. During the hard money, while rented, we were only paying $210 a month more. But the biggest take away is we never paid that, our tenants did. Thats another reason I love getting the rehab done quick and using the power of the BRRRR strategy. Even at 12% and 3 points, hard money always has its place. For your duplex, talk with a local credit union for current cash out rates. Or you can find a good mortgage broker, all depends on who you want to create a relationship with. You just need the rate, term, and income/expenses to see your cash flow.
    Zach Stillman from Saint Louis, Missouri
    Replied 8 months ago
    Quick question; how much did it rent for?
    Scott Hollister Rental Property Investor from Connecticut
    Replied 8 months ago
    Currently under market for $1675. PITI is 1200 or so. Actual cash flow is probably 150-200 a month after owning this since 2016. Not a crazy profit per month, but this is an A class house in our market, in a great neighborhood, newly rehabbed so repairs are minimal. When you add in appreciation (bonus on top over time), principle pay down, tax benefits, ease of management, no cash in the deal, etc. then it becomes a great investment in our market. Plus I used the cash out to purchase the next couple deals and seed my other business.
    Dave Rav from Summerville, SC
    Replied 8 months ago
    I think this is very acceptable cash flow, given you pocketed $26k on the front end!
    Zach Stillman from Saint Louis, Missouri
    Replied 8 months ago
    Thx for the reply!
    Greg Fyfe
    Replied 8 months ago
    Way to do your due diligence to make your early experiences a success ... not only your strong physical work-ethic but also in educating yourself on the entire process. Well done!
    Dave Rav from Summerville, SC
    Replied 8 months ago
    Awesome story! I love this. It does show the power of DIY. Another super important point regarding the knowledge you have on renovations = you know what it takes (and what it costs) to perform various projects. IE, if a contractor tells you materials cost $1k and you know for a fact its more like $250 - even with their markup something isn't right and you should question it.
    Mary E Copas
    Replied 8 months ago
    Sounds great. I just got a quote of 3K to just paint kitchen cabinets. I thought it was a tad high.
    Ryan Mayes Rental Property Investor from Albion, NY
    Replied 8 months ago
    Job well done! Crazy part is you can find numerous articles on here saying your crazy for DIY and you should have hired it out and not made 26k cause your time is worth more than that blah blah blah. Then you'd only cash flow $150-200 a month without the 26k in the bank. Job well done and a great example of why we should do more DIY as investors who aren't millionaires. That is the route we take also, bought last one at auction for 16k put less than 10k-12k into it (had we hired it out it would have been at least 25-30k in rehab-roof-garage roof-siding-flashing-aluminum window wrap with built bent in J channels, some electrical and plumbing) and now it's worth 75k, rents for $900 a month and we are refinancing it to pull out our 70% or like 52k so we are doubling our cash in hand and still cash flowing $250+ a month in a b+ area. Keep it up, I like reading real life articles for every day people like most of us on here and not some pipe dreams.
    Ryan Mayes Rental Property Investor from Albion, NY
    Replied 8 months ago
    And great job to your father. My oldest is bow old enough to start helping with small things, hes 8, and we intend to show him the ropes and let him get some small experience in our rentals and our own personal home projects. So awesome your dad took the time to show you everything when you were younger. That experience is priceless, that and finances are 2 things we need to teach our youth.
    Vaughn K. from Seattle, WA
    Replied 8 months ago
    This is definitely one of the things many people tend not to discuss a lot. The truth is that depending on your situation, doing a lot of the work can in fact make a huge difference, especially when starting out. Doing some of the work yourself could be useful in multiple ways. For one, you can outright pocket more money, which could enable you to quit working a full time job earlier than if you were paying to have the work done. This is valuable in an of itself as an argument sometimes if you need to escape the grind, and don't mind working on things. It all depends on where you live, but many construction jobs, especially if using a decent sized company where the company has all the work done by employees (read not one man owner/worker type situations), have to bill out a LOT per hour to make a profit. Even simple stuff like painting will often be billed out at $40-60 an hour now in expensive areas (or more I would suspect in some spots), with many other trades higher still. Plumbers and other higher end stuff can easily exceed $100 an hour. If you save $100 an hour, that's the equivalent of a $208,000 a year job, assuming 40 hour weeks for a year. Even at $50 an hour that's $104,000. Not horrible pay. Even if you make a touch more than that from your day job, gettin' some bonus cash made at 75% or 85% of your full time job rate isn't bad. If you make $600K a year, maybe don't bother... But very few people make that kind of cash from their job. You could alternatively still make an overall acceptable amount of money on a wider range of properties where the numbers wouldn't work for somebody hiring everything out, but still work for you. What if the difference between making a deal or not is $5-10K. If you're down for doing painting, and even one or two other odds and ends, that can make a deal work, even if you still sub out other stuff. You're working for it, but you are getting paid for it too. Especially if you're cash strapped, but rich in skills or time to learn skills, it can be a good way to go. Of course it won't scale too large, but you don't need it to. If you can squeeze in 1 or 2 a year, that could add up very quickly over a couple decades if that was what you were happy with. Or you could just stop doing it once you reach a certain point. It's all up to you. But talking down on getting stuff done yourself, especially in the early stages, is just dumb.
    Jordan Murrell Investor from Las Vegas, NV
    Replied 6 months ago
    Excellent article. I’ll be sure to implement this in my future properties.