Friday we closed (as sellers) on our first SFR rehab. Enjoyed the experience and there were not a lot of surprises. We had looked at rehab opportunities for a couple of years but the numbers never seemed to work especially with the "unknown" factor. We decided to pull the trigger with what we thought would worst case scenario we would break even so we could at least get one under our belt. We are not able to report that we made $187M and I now after a recent post it turns out we may be financially dumb for flipping (just kidding), but we definitely enjoyed the process and were able to make a little money in the process.
The house: Here are some before and after pictures.
Purchase Price - $78,000
All in Cost - $53,376
Sale Price - $157,000
Closing related costs - $8,927
Profit - $16,697
Return on investment - 12.7%
Wow congrats @Katie Neason I watched the video great job and very nice profit!
I am curious to know what surprises you ran into during your rehab and how you handled them? (I have never done a rehab!)
wow nice job
Thanks @JerryMarshall and @MichaelWestberry. Michael, we did not have a lot of negative surprises on this one. A couple of things that came up that could have turned out badly but didn't were 1. our plan B if we could not sell it was to rent it. We are in a town that has as many college students as permanent residents. We discovered about a month into it, that the house was in a neighborhood that restricted occupants to no more than 2 unrelated people. This would have definitely hurt us if we need to rent it and it eliminated some of the parents who were considering buying it for their kids while they were in school. We even added a 3rd bathroom to make it a 3/3 perfect for college renters. While it was still a nice feature, it probably was not work the added expense.
Probably the most valuable lesson I learned with purchasing this house is that a contract does not require you to buy a house, but rather give you the first right to buy it. Prior to this house when something would come on the market we would go look at it, line up contractors to give us estaminets, run the numbers, then decide if we wanted to make an offer. The good ones are always LONG GONE by then. With this house, and since, when a house comes on the market we are there within a couple of hours and but an offer in right away to lock the deal up. We then do inspections, get bids on things we are unsure about and negotiate the contract based on that.
I feel like we had over prepared and analyzed prior to pulling the trigger and the rehab occurred early spring which was great timing in that contractors and subs were not too busy yet. This was definitely not the case with the house we are finishing up right now. However we worried about something bad popping up constantly. I woke up with nightmares that the house had caught on fire, that is was built on a sink hole (which we do not have here :), and that the house would not appraise. Even now that it is closed I worry something will go wrong and the buyer will be upset about his purchase. However all in all it was a fun process and I want to do more, but definitely need to get the margins up. I think that is all a function of buying better on the front end. Easier said than done!
Congratulations! The house looks amazing!
@Katie Neason curious as to how long this project took from purchase to sale?
Congratulations and nice work! How close were you on your repair estimate? Just curious. Thanks
@Rocky V. We ended up doing about $5,000 worth of upgrades (all new backyard fence (and the backyard was huge), kitchen backsplash, etc.)
What caught me off guard more than anything was the utility bills, on going lawn care, open house and "realtor love" expense, a few staging items, etc. Luckily they didn't add up fast, but I didn't have them in the budget.
I'm curious if you have to pay capital gains tax on your profit come tax time, or is that already figured into your numbers above?
Awesome video and congrats on the success of your first SFR rehab. Keep it up!
Congrats! Celebrate and get busy again!
Looks good Katie! Congrats on the first flip! now on the the next one!
Awesome job! Congrats! I love the sexy pink tiles! =P
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