My First Flip (Michigan)
TL;DR - before, during & after pictures are available here along with the listing link:
I purchased a 2/1 SFR from a County tax sale, the property is located near a major university (which at the time was the ONLY thing it had going for it). I paid cash ($7500) and figured on about $13k in renovations (ended up at $15k) with the intent of selling (ARV $60k) if the market remained favorable or renting (~$650/month) if it was not.
In Michigan, tax sales prevent potential buyers from inspecting the interior of the home. I did a few drive-by's and found out the owner still lived in the property so I added eviction costs to my expense sheet.
Getting the tenants out was painful and ended up taking way longer than it should have. I heard every excuse in the book and kept falling for it, I felt really bad for the family and didn't keep up the pressure like I should have (and WILL do in the future).
The house itself was in complete disrepair; dogs had chewed & clawed the floors, doors and walls. The kitchen was in shambles and the bathroom was trashed. In the end, it took three 30 yard dumpsters (for a 780 sqft house!) for the debris, trash and demo to get this sucker cleaned out.
Some of the highlights on this flip included all new: windows, doors, flooring, roof, drywall throughout, whole home insulation, electrical service, kitchen cabinets & counters, entire bathroom, lighting, paint, etc.
The property was listed for sale at $65k January 2nd. I've had tremendous interest (over 5800 web-views in Jan) but terrible weather so only 6 showings so far. Feedback has been fantastic but no offers yet.
I'll post updates as I get them
The jury is still out on this project but I'm looking at a potential profit of $30k-$35k depending on selling price and closing costs.
Some lessons learned:
Time IS Money - I spent weekends and nights working on this place to save some cash, in the end I could have paid a bit (~$5k) more and had it ready to sell in weeks versus months.
Keep track of everything - The amount of data I have from this flip is astounding: Square footage of rooms, kitchen layouts, electrical diagrams, paint schemes & material samples, inspection documents, eviction process, quantity of materials used and of course all of the costs.
I'm much more confident in accurately estimating jobs and can spot questionable charges/material quantities - the best part is that the more flips you do the better your data gets!
Evictions take time - I wasted months getting the owner out, so while the actual court/attorney costs (~$650) weren't terrible the lost time was.
Tax sales & title insurance - Getting title insurance on a tax sale is much harder and more expensive than for a "regular" home.
Look into "freebies" - The city this house is located in offers free pickup of large trash items and of leaves & tree limbs; check online or call the city.
I also received a nice energy rebate from the power company for using energy efficient windows and insulating to the required r value.
Order early - My countertop install was delayed by 4 weeks due to my lack of planning. Get the order in and measurement done as soon as possible so you can schedule your install when it's needed.
Don't go "cheap" - I initially planned on using the cheapest materials I could get away with but quickly realized that for a small increase in price you could get a huge increase in quality.
My bathroom vanity is a great example, for $70 more I got granite counters & high quality nickel fixture that looks fantastic.
Discounts - You'd be amazed at how much you can save if you do the following:
- Price it out - Shop around, look online, compare prices & get at least 3 quotes on jobs.
- Rewards - Credit card miles/rewards/cashback can stack up in a hurry, don't overlook the benefits.
- Coupons - Veterans/Military get 10% off at Home Depot & Lowes. For the rest of you, there is a 10% off movers coupon that you can download and print from Lowes. Also, Menards (regional) offers an 11% off sale several times a year.
- Buy gift cards (arbitrage) - You can easily find gift cards with a discount (i.e. you pay $90 for a $100 gift card) using a coupon code or purchasing through a gift card exchange. The cool thing about this is that you can use your credit card for miles/points and then you can use the gift cards + coupon above.
Thanks for reading,
Scott