Good Profit on First Flip / Spec build

38 Replies

Finally completed my first rehab project after 10 months with a partner from BP. He put in the money and I put in the work. The house was nothing more than a shell when I found it on the MLS. It had been partially demolished by the rehabber who bought it before the downturn and then sat open to the elements for 4-5 years. There were no interior finishes and no plumbing, electrical or mechanical systems. It was a definite eyesore for the community.

We renovated the house from 900sqft to about 1550sqft with 3 bedrooms and 2.5 baths. The house sold without listing it on the MLS right after we got our drywall up, about 2 months before it was complete. We made about a 22% profit on the sale. All in all, it was a great learning experience and a successful first effort.

Here are the before and after photos.

    

Holy buckets! That's beautiful! That kitchen is sexy! Nice job, Keep up the good work!

I'm working on my first rehab with another investor in my local market. Its about a 70% total gut job or so. New electric and plumbing, walls, floor, kitchen, roof, siding, etc. The only thing that is staying as of when it was bought is the furnace.

Our won't be as high end as the one you've got but it will be a nice character home in the older part of town. 

Great to see BP members partnering and working together! Nice job on the rehab!

Wow! If you could post a costs breakdown for such a project, it'd be great for us newbies. I can even imagine!

THAT, is a transformation!  How did you decide to keep it vs. scrraping it?   Do you still think that was the best decision?  My fist deal in Austin in 2011 was similar. Really a toss up between rehab or scrape/build new.  We rehabbed, but maybe should have started over.  I'd like to see the numbers, too.  

Thanks everyone. I really appreciate the comments.

@Zachary D.   Here is a cost breakdown.

purchase price $129,438.79

construction costs $161,804

taxes, insurance etc. $3,577.63

Closing costs  $21,976.94

Sale price $386,500

profit $69,702.64

@Jon Klaus   Thanks! Yes, in a perfect world, scraping it would have likely been cheaper and definitely quicker. Unfortunately, it wasn't possible in this case. The house is in downtown Charleston SC. Its just above the main historic district where you have to get tear downs approved by the Board of Architectural Review. An almost impossible feat. We kept the historic structure, existing heart pine flooring, existing brick chimney and exposed the old rafters and used the historic living space as a selling point. It was definitely what attracted our buyer. 

Ah, yes, we have to deal with the Architectural Review Board in Austin, too.  I'm pretty sure they would have let us demo what you had, unless it was 100+ years old. That's pretty rare in Austin.  

Solid numbers--good job! 

Wow - nice job @Patrick H.  !  So good to see this kind of improvement going on in the Holy City!  I am watching the Charleston market as well.  My husband and I are frequent visitors and hope to do some investing there in the future.  Will have to look this up on our next visit!

Well done.

Bravo. It wasn't easy, but we hit a "triple."  And yes it was a great example of teamwork, because neither of us could have accomplished it without the other. Toward the end it got crazy with the closing hassles. And the purchasing of it wasn't easy either. The actual build was slow as molasses but pretty much according to plan. Overall, if we could repeat the exact same process I would probably be game, but it's harder and harder to find a lot or house that would work due to competition. So it all kind of adds up to me putting my principal and profit into the stock market with a portfolio manager who is likely to get me 8% annually taxed as capital gains. It's the path of least resistance. But, I know some night I'll be drinking and get wistful, wishing we were doing two a year....

@Patrick H Thanks for the breakdown. That's fantastic. I also learned from your post about paying attention to historic districts, of which we do have some in Arlington, Texas, I believe. 

Also, I think that one thing us newbies don't think about is doing big projects like this because the numbers are big. This broadened my horizons a little. :)

Thanks again.

@Patrick H.   WOW!! That' is really impressive, I applaud your vision. This is definitely one of the best before and after pics I've ever seen. Congrats. 

Beautiful job, @Patrick H.  !

My projects are usually tear downs, but I have a soft spot for older homes.

Great work!

Absolutely beautiful!  Very nice job -:)

Thanks everyone!

@Karen Margrave   I appreciate that. I know you you've seen your share of renovations. I hope to get to that level someday.

Definitely couldn't have done it without @Jason Merchey  . As he mentioned, he was the money partner on this. It wouldn't have happened without him or Bigger Pockets putting us together. The project had its ups and downs, but turned out well, which is what counts. As Jason mentioned, its hard to find a good deal in this location now so I'll have to start using all I've read on BP in terms of finding deals. Anyone with a great deal needing some help in Charleston, let me know.

@Zachary D.  the benefit of a project like this is it scares most investors away because of all that is involved. I'm fortunate to know a lot about construction and really the surprises are limited since the building was completely opened up.

@Steven J.  Charleston is a beautiful town. Lots of good projects happening right now. There will be a lot for you to see next time you're in town.

@Patrick H, we are Charleston investors rehabbing 12 houses this year and wholesaling others. We should discuss mutually beneficial opportunities!

Kudos on the rehab. Looks great!  Good numbers,too. Dealing with the BAR is a feat in itself. Would love to meet for lunch or coffee sometime. We live in Mt P.  Look forward to hearing from you. 

Nice job Pat and Jason!   I have to admit I would have walked away from that project myself but you did good.    The experience might turn out to be more valuable than the profit.

Amazing!  It took a lot of vision and persistence to bring that project to completion.  I'm inspired.

Thank you everyone. Yah, real rich experience. At times I felt like I was doing a "trust fall" with Patrick catching me. Considering this was the first fix and flip, I am not sure why I was able to trust my way through the process. As I mentioned, it was both smooth at times and challenging for me mentally during others. But as John said, the experience was noteworthy, and the profit was acceptable (from a ROI point of view). So I guess all's well that ends well.

Yah, if you have any fix and flip ideas around Charleston, talk to Patrick. If you have a buy and hold that pulls down 8+% ROI over a 25 year lifespan, hit me up. I am also open to a new build for $110-$130/foot not too far from the Summerville area. Otherwise, I am gonna put the money into stocks, because I feel like the process of a fix and flip isn't my cup of tea. At least this year. You know the phrase "hurry up and wait?" I feel like I did that until my serotonin became permanently depleted. I'm kidding. Sort of. Either of those other two wealth-building options would be preferable to rehabbing at this stage in my life.

@John Semanchuk   - nice to see you again. Hope this finds you well. 

That is something else. Even after doing this for almost a decade I would be very nervous to take on a project of that scope. Congrats!

Thanks Jason, I'm well.  Just up to my eyeballs in my daughter's renovation and my own recent townhouse purchase.

Are you so good at stock picking that you can get 8+% consistently with little risk?   I stick with houses because I can understand them.  It would be nice to be smart enough to just move paper around...

For some reason the @Somebody tag doesn't work for me.  Maybe a pop-up blocker or something?   Anyone else have this problem?

Thats amazing! That was a pretty extensive rehab. Glad you was able to make the numbers work, especially in downtown with the stiff requirements they have at this time.

@Andrew Syrios  Thanks for the complement. It was a daunting building, but we had a good plan and we stuck to it.

Thanks @Marcus Brown  , Downtown definitely adds to the challenge. 

Yah, @Andrew Syrios, it was a bit of a gut-check. On the one hand, my mom noted that I am "very trusting of other people" and my wife would probably note that I am fairly skeptical. I ponder about which is truer and to what degree and what the context is for the difference. Either way, yes, at times, it ranged from "autopilot" to "try not to panic" to "I am going to kill that person."

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