$27k on my first flip!

48 Replies

It was a year ago that I closed on my first flip. The night before I closed, I almost walked out on a $4,900 deposit because I got scared. Thankfully, my step father was good enough to walk through with me and calm my nerves. He basically said that even if I break even, the education will have been worth it.

I was pretty picky about the way the house turned out. I had issues I needed corrected. I had my contractor stress about money (Had this with 3 different GC's on 3 separate rehabs). The rehab ran over by 2-3 weeks.

In the end, I had two full price offers on the house before it was completely finished. I sold it a few days after the 90 day seasoning period required by Fannie Mae.

I secured a recommendation letter from the buyer.

I made $27k after all closing, holding and selling costs. That was a true net number.

I read a lot, listened a lot and spent a lot on my education. I can't imagine where my real estate dreams would be if I walked out on that first deal!

Since, I've purchased 5 more properties while I work full time.

What I learned: Educate yourself but more importantly, ACT!

Thanks for reading.

I am about to take that first plunge myself, congrats to you! It's really inspiring to hear someone else do it.

Congrats! That is some good motivation for me as a new investor that has yet to pull the trigger. Thanks for sharing!

Thanks guys. I've sold another flip and I'm about to put another one on the market.

It's less scary now but each had issues! Mostly contractor issues!

Congrats Dan! Thanks for sharing your success story!!

What were the contractor issues? Do you not work with the same contractor on every deal?

Congrats! Great to hear your story -- truly inspiring.

Congrats Dan! Great story, and indeed, there is always an education to be had. Doesn't hurt to make $27k in the process while you're at it.

Well done, and I'll add my thanks for you sharing your trepidation before the first close.

Thanks everyone.

3 flips, 3 different contractors.

Flip 1) They did good but it really dragged on at the end. I had trouble getting his full attention because he ran over on time and he needed to make money elsewhere. I had to flip out a few times. In the end, I was probably a little uptight.

Flip 2) I hired a guy that had a crew. I thought I was set. They made great progress....until I asked him to handle the plaster repairs. Set us back two weeks. He told me he was already thin on margin because he was trying to keep his crew working in the winter (December).

He asked me for an advance on the draw (said he needed it to finish the job). Then after he got that, he and his wife started singing the blues about how much money they're going to lose. In the end, I had to give him $6,500 more to finish.

Lucky for me, it sold before I had to list it. (Had two full price offers again). I made $20,000, but should have done much better.

******Beat the draw schedule and Scope progress into your contractors head before hiring someone. Make them sign an Independent Contractors Agreement and Scope of Work, specifying the draw schedule********

Flip 3) I hired everything out separately. It was brutal. Every contractor criticizes the other's work. They have that, that's not my job mentality so there isn't any cohesion.

I broke my own rule and paid ahead of the draw schedule. In the end, the GC did what he said he was going to, but I had change orders that I wanted him to do and he all of the sudden got more expensive because he 'underbid the job'.

I haven't sold this one yet, so I won't share numbers at this time :-)

Conclusion: I have talked with a few investors that have done over 100 transactions. They say that contractors will always be your biggest battle. You have to background check them! You have to lay out the rules and stick to them! (I'll try following my own advice on my next one!)

Sorry for the long post. I hope it helps!!!!!

Well done and congrats!!!

I like how you said you read and listen a lot and it sure did pay off.

@Dan Costantino great job man! Glad to see someone fairly new doing well. Hoping to be in your shoes within the next 6 months while hunting for my first flip! Congrats again!!

Awesome story Dan. I have 3 rentals and for my next venture, I want to do a flip. So I guess you recommend hiring a GC over subbing out the work yourself? Well worth the money? How extensive/involved were your flips?

@Travis McDaniel

1st flip, I spent $43k on the rehab (70 yr old house)

2nd flip, I spent roughly $60k on the rehab (108 yr old house)

3rd flip, I spent $47k on the rehab (114 yr old house)

*The older neighborhoods are coming back, but they need a lot*

I recommend finding a GC that has a lot of proven experience. Can do most things. Willing to coordinate and hold subs accountable (electric/plumbing/etc.). I haven't found that GC yet.

Here's to hoping #4 is the guy. We start next month.

@Dan Costantino great job. keep it up and keep us informed. it's very encourageing. Trying to get my first buy and hold.

"act"! Is the big one!

@Dan Costantino Congrats, and thank you for sharing your story with the BP community. Very inspirational.

Best of luck with Flip #4! Please keep us posted on your progress with that one.

Great lessons here.

1. No matter what, ACT. Don't spend your entire life thinking about what could be, just do it. Great lesson there.

2. Dealing with contractors. In all of your deals, you have learned quite a number of important times. After learning, you had to even learn one lesson again. Dealing with contractors is one if the most difficult things to do. The lessons you learned and shared here are so very important. I have flipped many homes of all different varieties and values, and I can say for a fact that sticking to your guns/rules, having a contract, and including completion time factors with bonus for early/penalties for late and draws is vital.

Here is another lesson I have learned I will share here: it is literally impossible to remember to include every fine line detail of every repair item you go over verbally and then place in ink into contract. Either video or record the verbal so you have a record of what was to be done and how.

Great job you just inspired me!

@Will Barnard

Thank you for your reinforcement. I enjoy reading your posts.

Great idea on the recording because I've certainly had those conversations that were conveniently 'forgotten'.

On another note.......Today I have received my first approval of lending from a Private Lender for my next project. This will enable me to scale in a strategic way using my own funds and OPM! Very excited!

Originally posted by @Dan Costantino :

On another note.......Today I have received my first approval of lending from a Private Lender for my next project. This will enable me to scale in a strategic way using my own funds and OPM! Very excited!

That is great news. If you would like me to review or critique your docs or process for the private loan, let me know, happy to help. Other than my own cash, private loans make up 100% of my funding, I have yet to use a hard money loan and I fund millions of dollars each year. Protecting your private lender's principle is of vital importance so make sure you have everything in place to cover them (low LTV, deed of trust or mortgage, promissory note, hazard insurance policy, personal guarantee).

@Will Barnard

I'll take you up on that offer. Should I use the email you have listed in your signature?

I am traveling but will be back tomorrow evening. I'll send it asap. Thanks!

Originally posted by @Dan Costantino :
@Will Barnard

I'll take you up on that offer. Should I use the email you have listed in your signature?

I am traveling but will be back tomorrow evening. I'll send it asap. Thanks!

Yes, that is the email to send to.

@dan constantino, GREAT JOB!!!

@Dan Costantino great advice, read a lot and learn, but also that you need to act if you want to succeedd.

One thing that helps when dealing with contractors is staggering as much of the labor part of the draw as possible to just cover their payroll, and the profit part doesn't come until EVERY item is complete. The less you owe them, the less incentive to complete the job.

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