First Fix & Flip - SOLD! (Phoenix, AZ)
Hi All,
I'm here to share the details on my first FLIP, hopefully to motivate other first-time flippers.
Property Info: 4 bed / 2.5 ba when I purchased it, but I converted the master bath and half bath into a master suite with a walk in closet, so the finished project was a 4/2 with a much more functional layout.
How I found it: This property was on-market. My realtor knew what I was looking for and sent me this property which had been sitting on the market for several months, likely due to the funky layout. The price had been dropped twice, and was listed at $350K when I walked it. I offered $330K knowing that the scope of work was going to be extensive to reach a peak ARV given the poor layout, and after a little back and forth with the seller, they agreed to the $330K.
Funding: I funded this flip with hard money and funds from my HELOC. The hard money terms were 75% LTV at 13% interest, and the HELOC funds were drawn at 3% interest only.
Timing: This flip went much longer than anticipated for a total of 5.5 months from purchase to sale. There were three main reasons why this project ran long:
1. My systems were lacking. There were many days when the property was empty without any work being done. This was definitely one of my biggest lessons learned from this flip - have efficient systems in place, especially if you're not hiring a GC to manage the project.
2. I didn't have a well-defined buy box before I offered on this property. Some fundamental things that you'd expect to find when buying a home (for instance, parking) weren't present at this property. As a result, I spent a considerable amount of time and money adding parking along with other features that you'd expect when buying a home. Big takeaway... my buying criteria NOW requires the property have either a garage or carport.
3. This might have been TOO BIG of a project for a first flip. We moved walls, added a laundry room inside the property, added a patio, added privacy fencing, added an automatic sliding gate, closed off exterior doors, added exterior doors, new windows, and all the cosmetic upgrades you'd expect in a flipped house. Needless to say, I was pretty ambitious - also naive - going into this project. Again, this comes back to not having a well-defined buy box before purchasing this property.
Final thoughts... I went into this FLIP with two main goals: 1. To not lose money and 2. To learn what it takes to flip a home. And although I do feel like this project was a success because I hit both of those goals, it for sure kicked my butt. On the bright side, I learned much more than I imagined I would, and am now applying what I learned towards the next flip. Better systems and a well-defined buy box.
Here's a breakdown of the numbers:
Purchase Price: $330,000
Sale Price: $475,000
Fixed Costs: Buying Costs: $2,800 | Holding Costs: $21,300 | Selling Costs: $16,460
Renovation: $73,400
Profit = ~$31,000
