I made $187,861 NET profit on this flip!

127 Replies

Congrats on your success Andy, it is always nice to hit a home run once in a while.

Being a numbers guy, I am wondering how you managed to hold this property for one year and sell it for only $32,000 in costs to get to your posted net profit?

Wow, what a beautiful and inspiring project/story. I agree with another poster, it would have been a great top off to the story if you'd given the tin toy back to the original owner. I'm not dogging you for it though, great sell on eBay too! 

@Andy M.  

  What do you think the value of the house was when you bought it had there been any other suitors for it or had it been listed... Sounds  like the real profit was made on the buy  IE buying far under wholesale value...  Did the little old lady know what she had?

It is interesting in this business where we gauge success by profit and how we don't think twice about a little old lady that might have sold her asset for half of even what a good wholesale price would have been...

When I was buying direct from owners I always wrestled with that... Wonder how other people think about it.. Or is it just Caveat Emptor  for the sellers with no regard to there financial well being... Just curious what others may think.

And congrats on a nice deal that is big one in anyone's book.  

@Will Barnard  Good question. I always look at people's "Net" numbers and feel the same way. I didn't incur any money costs on this deal because we didn't borrow any, I guess you could tack on opportunity costs, but I didn't. Commissions were $18,690 (we paid the listing agent less than full commission). Seller concessions were $4654, and property taxes, insurance, utilities, and other misc stuff rounded out the field. Hope that helps.

@Aaron Mazzrillo  What's up buddy? Thanks for the compliment. I'd trade this deal for your Mobile home park deal. :)

@Jay Hinrichs  I've struggled with that same thing. I buy a lot of houses wholesale and I definitely try to be fair to the sellers. This "little old lady" that you see in the video was actually a 1/5 owner, she was one of the only ones who lived local so I only met with her. I can assure you that they knew exactly what they were doing. That was why it took so long to actually purchase it. They (the group of owners that she represented) called all of my references. They wanted two things: 1. A fair value for the house. 2. To make sure that the home could "live on" through another family living in a fixed up home. 

Although $113,000 was a good price to purchase the house at, we added value through a lot of work and expertise. This remodel would have cost others with lesser contacts 200k ish or more. Plus, as you know, remodeling a house is an art, not a science. Choosing the finishes and look will make or brake you. With this home we also added value through finishing the basement and upstairs square footage. Finishing the attic the way we did (I don't know if you noticed, but we literally created a new staircase in the front of the house so the upstairs "master suite" could be accessed) really added a lot of value. 

When it was all done she walked back through the house in tears, hugged us, and loved the house. There was a for sale sign in the front yard for 500k and she didn't bat an eye at it. She was THRILLED at how we handled the project. :)

Good question though.

Andy,  That was awesome!!   A great way to document your story as well!   And I know it meant so much to the former owners... what a wonderful story!  Thanks for sharing!

@Andy M.  

  to be fair I did not watch the video  but it sounds like you did major reno for far less than others could do it for.. thereby creating your excellent Delta.

We had this scenario many times in my days of timber... IE you Cruise a stand  which is usually pretty accurate  but not always.. you pay for the standing timber thinking your going to make X and then you hit a huge over run  and the next thing you know you made 100 to 200k more than you projected.. Or it could go the other way you Cruise the stand pay and the harvest comes in Light and you make next to nothing...

Houses on the open market seem a little easier to get a handle on .. But in my work a day world were I fund wholesaler flippers nationwide. Some of my guys can rehab for at least half of what it would cost us here in Oregon. So value is made in labor and efficiencies no doubt. 

Like I said not much talk on BP about helping sellers maximize profit  LOL.. its all about helping investor buyers Maximize their OWN profit.... I guess that's what makes the world go round.

@Jay Hinrichs  Good points. I would say the profit was a combination of: 

1. Buying right

2. Adding square footage and doing the RIGHT remodel (vision)

3. Getting things done for less

You're right, there isn't much talk about getting the max profit for the seller, but as self interested people, they sell for their own reasons and it isn't always about money. I definitely see what I do as a wholesaler as a service and not deceiving people out of their equity. I've never bought a house from someone who didn't want to sell it. 

Thanks for opening up some interesting conversation!

@Andy M.  

  you bet ,,, I was just curious what others would think along those lines...

I know for me personally when I did deal with individuals each was a little different too you may take a liking to one and want to give them more than you could probably buy the property for... and there are others that are kind of hostile and you want to get the best deal you can and really have no regard to the seller.

Funny story, I have a good friend.. Retired Car dealer who was very bored and instead of playing golf 6 days a week wanted to get into buying a few homes and flipping them.. This was 08 09  crash.. he was in Bend Oregon that got hammered.. And of course he all cash up... So buying was not a problem... So I said go talk to a few folks and see if you can buy there house before they lose.. it... He did it once... Called me back and he said he just could not do it.. He said he donates in his church to help people save their homes and could not buy them  even if it was courthouse steps.. So he joined me in loaning money to flippers he felt better about that... its a personal thing for sure.

@Jay Hinrichs  True, different comfort levels for everyone in doing this business. My favorite thing is working with private sellers, building relationships, finding out what they need, and creating  win-win. I've had lots of sellers crying at closing. If you check out the testimonials on sellmyutahhousefast.com you will see some of them. I even have a video with one seller who was really an advocate for me. If you knew me personally you would know that I really do enjoy helping people and sellers. It's not all about the quick buck. Thanks again! :)

@Sami Ibrahim   My buddy Matt and I have been friends for awhile, how we met was a long story. He currently does about 40 flips a year (mostly starter stuff) and we talk and hang out all of the time but we maintain our own businesses. I'm mostly a wholesaler (I did 90 wholesales last year and 15 retail flips) and Matt is mostly a retail flipper. Matt just has a knack and eye for knowing what will look good on a property. 

andy, did you buddy do the work or his crew did?

btw, my wife does these same coffee/scrap books for each of our yearly vacations. we have about 7-8 books with pictures of every place we visited. they are amazing.

Originally posted by @Andy M.:

@Will Barnard Good question. I always look at people's "Net" numbers and feel the same way. I didn't incur any money costs on this deal because we didn't borrow any, I guess you could tack on opportunity costs, but I didn't. Commissions were $18,690 (we paid the listing agent less than full commission). Seller concessions were $4654, and property taxes, insurance, utilities, and other misc stuff rounded out the field. Hope that helps.

 I see, that is a great deal on your agent fees. You mention "we" a few times, did you have a partner that you split the profits with or does we mean you and your family? Regardless, deals like this are few and very far between so when you land one, it is very exciting and I agree with one of the statements from another poster that these profits are really made at purchase (at least a majority of them).

@Vicki K.  Right? I think they are the cutest kids on the planet, but then again I'm biased. :) Thanks for checking out the video. My older brother is the magic video editor and I've told him that people like the video. It makes him REALLY happy.

@Will Barnard  Good question. "We" as it pertains to this project was my partner Matt and I. We used our own money for the whole thing and we split the profits down the middle. So I had a total of $131,500 ish invested in the project and he did as well. We split the total net so we each walked away with $93,930 net profit. Then of course we paid taxes. :)

We (Matt and I) have both been investing for awhile so this wasn't our first rodeo, I just knew that the remodel scope was beyond what I wanted to tackle on my own so I brought Matt in. Like I mentioned earlier Matt is very talented at remodels and has an eye for colors and how to configure things to add the most value. It turned out really nice.

@George P.  My buddy Matt didn't do any of the actual work, it was his crew and he oversaw the whole thing. Both Matt and I made decisions as it went along, but honestly he made 80% of the decisions and just brought me in for a second opinion. The remodel was really his work of art.

This was the first "scrapbook" I made of a flip, and I only did it to give him a copy as well as a remembrance of an awesome project. My wife makes these shutter fly scrap books every year for each of my kids and they are really cool. I actually have a bunch of them on the bookshelf in my library at home. Thanks for the comment!

@Angela Merritt  I love hearing that! That was the purpose of the video. That is actually the main purpose of most of the videos on my blog, I really want to inspire others to see what is possible. Sometimes on the house flipping TV shows they make it look easy, and that definitely isn't always the case.

I really do appreciate the encouragement. 

Andy, thanks for the clarifications. Taking on a larger project beyond your comfort zone can be scary and challenging, taking on a partner in this case sounds like it was the best course of action for you. Your numbers provide each of you with just over a 71% return and in a timeframe of a year! that is very good! congrats to y both. Perhaps after this experience you will have the confidence to tackle the next big one on your own.

I have had several investors ask me about coming on board as a consultant for large projects they have rather than a partner. I am actually considering this as an option for me. I don't make nearly as much, but I only invest time and have no risk and the investor with the project gets all my years of experience and contacts, seems like a win win.

@Will Barnard  I can see where that would be a benefit to both you and your investors. People don't realize that on bigger projects a certain expertise is required. To do a starter home you can't really mess up the remodel too bad, but when you get into step up homes and beyond the buyers get pickier. I know you do upper end stuff in CA and have some huge profits. I have a lot of respect for people who can flip upper end homes. It is definitely a different game.

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