Whew.. My long, first year as a full-time investor

22 Replies

I am closing in on my first year as a full-time investor and wanted to share some of my ups and downs with fellow investors. I got funding last September and subsequently purchased my first house to flip then quit my full-time part-time job. Dumb?? Maybe so because I did have to live off credit cards for a while as I waited for the house to close, fortunately I love peanut butter and it's relatively cheap. I also agreed to purchase a package of 4 houses for $250k whilst my first flip was still on the market and I could only come-up with $120k. Thankfully they didn't require me to provide a POF letter. At the end of the day I purchased 5 houses, 3 more than my intended 2, I flipped 2, "wholetailed" one, converting 1 to a triplex with 3 storage units, and am looking into subdividing the last parcel into 3 parcels, selling 2 and then lease-optioning the house after remodel. Below is a summary:

Deal 1, my first flip:  2500s.f. 50's ranch in historic community. 

Purchase price: $28k

Rehab: $105k  (includes holding costs)

Commissions/Fees: $13k

Sale Price: $212,500

Profit: $66k

- I could have made $10 - $15k more I feel. I overpriced the home initially which caused it to sit on the market longer and foolishly cut some landscape finishes out at the end of the project which hurt my curb appeal. Overall, a great learning experience and nice profit for my first flip.

Deal 2 (and 3, 4, 5), my package deal: Went to view 1 and it turns out to be an estate with 4 separate properties, I drive to each property immediately that afternoon and make an offer for all of them even though I hadn't even been inside 2 of them, crazy? Maybe I've got plain dumb luck, but a disclaimer: don't do this if you've never purchased a property before.. actually you might not want to do this even if you have. I didn't have enough funds due for all 4 so at the end of the day I decided to sell off one of the houses instead of taking on more debt and putting me and my investor in a bad position.

House 1: 2700s.f. A-frame on 4 acres in rural community 15mins outside city. Home needed updating but livable. I sold , or "wholetailed" this property to the next door neighbor for $130k, used funds to close other 3 houses. I'm confident if I had the funds to close all 4 I could have sold the home for $150k +/- and made a bit more on this deal.

House 2: 1400s.f. ranch. Just finished remodel on home on Friday, showed home on Sunday and have a full-price offer, no agent. If deal closes I'll do a bit better than expected on the home which is very exciting.

House 3: 1800s.f. ranch with 650s.f. detached, 2 bay garage with apartment on top. This home lends itself very well to a triplex conversion, the home will receive a full remodel with conversion to triplex done to code. The building is located in a blue collar area, I'd call it a C or C+ area between a brand new, high-end for the area apartment complex on one side and retirement home on the other with new construction brick condos behind it. 

Purchase: $40k

Rehab: $100k

Gross Rents: $2330 

50% rule $1165 - $709 mortgage (going to live in a unit for a year, finance 30yrs at 4.5%)

=$456/month

I underestimated some repairs on this that have really driven up the remodel budget more than I thought it was going to be but I like the area and am being conservative on rents. 

House 4: 2/1 800s.f. on 1 acre lot. I am looking into subdividing land into 3 parcels, selling 2, and then doing a lease purchase or renting it, have not decided on this house yet as the numbers are good if I pay cash but not with financing and I need to retain capital for continued growth. 

Purchase: $10k

Remodel: $30k

Rent: $700 

50% rule $350 - $316 (15yr at 5%)= $34, if cash I'll cash flow $350/month with a 10.5% CoC.

That was a long post but I wanted to share a little about my journey, it's been a long year with 14+ hour days when working on the flips. I've made a lot of mistakes but have gained valuable knowledge and developed good connections. Honestly, there have been some tough moments, but I love this business and am looking forward to what the future holds. If you're still reading I welcome any feedback and/or questions, happy investing.

Comgratulations Chris. You deserve it for all of your hardwork. It wasn't easy, but it was doable, and you did it. 

A BIG CONGRATS!!!

 @Minh NA 

Thanks, you're right, it's doable even if not easy. 

@Joaquin mart. I appreciate it and hope things are going b well for you!

Fantastic summary, Christopher.  I have the pleasure of working with many real estate investors in the beginning of their careers.  Its very clear that your methodical approach to moving cash through real property and back out the other end is effective and intentional. I wish you the best.  I still eat ramen noodles for lunch often to remind me of those wonderful times as a beginning investor. Great work.

Medium offers2owners logoJack Butala, Offers2Owners | [email protected] | 480‑467‑0359 | https://landacademy.com

Great post @Christopher B.  it was very encouraging to hear your experiences through the first year. Did you find your partner here on BP? Also what experience did you have going into the fix and flips? Did you do a lot of the work yourself or sub it out?

A few before and after pics of my first flip. (not sure why some pics turned sideways)

Congrats on your first year dude! If only SoCal's market was affordable as Tennessee, I would've taken that first step into my first deal  already :/ 

That really is a great looking house now. You did a lot of renovations. I am surprised at how much the new windows, siding and landscaping changed the curb appeal. Both definitely make the house look like a brand new one. 

Toast to the first of many. How were you able to find such great deals? 

Congrats! This is inspiring!

@Stanly Hernandez  thanks man, feel free to bring some of that cash to East TN

@Terri Lewis  thanks, it was major renovations and it turned out well. It always surprises how much a coat of paint or some fresh mulch can change the look of a place.

@Sandra Roddy  I found the first one through an agent/investor friend, took her to lunch and she happened to have found it the day before. The package deal I saw a sign on the way home, set-up an appt. asap and made an offer almost immediately. There were 3 more offers the following morning and all of them higher than mine. I've had some good fortune but most importantly I just took action.

@Jason E.  thanks for reading, I hope this story can push you to find that next deal!

Awesome!  Looking forward to hearing more success stories from you!

What a great first full time year, congrats!! It seems like you have some sound knowledge on how to structure different deals. I'm impressed with the creativity and flexibility in your approach to each property you described. Keep it up!

@Christopher B. Awesome job on renovations that looks like a completely new house! How did you go about finding a GC? Were the cost/expenses of renovations in the ballpark of wht you expected?

Nice first year @Christopher B. ! We recently moved to Knoxville and I'm currently working on my first flip here. Do you have a sheetrock contractor you can recommend?

thanks @Erin Wysocki  , I've got a couple more coming up I'll share when finished.

@Silvio L.  thanks for the kind words sir, I've learned a lot of it on the fly.

@David Ward    I've had trouble finding GC's for a decent price so I've been piecing my team together and picking-up the slack on some of the general carpentry and labor myself. I've gained 2-3 good contacts with each project so it's just a process. Between trial and error and a couple of references from a local investor friend I think I've got a decent 3 man crew now to handle the carpentry and general labor on my next couple projects. I've been fairly close on estimating my rehab costs being about 10% over on each project so far. I'll continue track expenses and improve my accuracy.  

Originally posted by @Christopher Bush:

thanks @Erin Wysocki  , I've got a couple more coming up I'll share when finished.

@Silvio L.  thanks for the kind words sir, I've learned a lot of it on the fly.

@David Ward    I've had trouble finding GC's for a decent price so I've been piecing my team together and picking-up the slack on some of the general carpentry and labor myself. I've gained 2-3 good contacts with each project so it's just a process. Between trial and error and a couple of references from a local investor friend I think I've got a decent 3 man crew now to handle the carpentry and general labor on my next couple projects. I've been fairly close on estimating my rehab costs being about 10% over on each project so far. I'll continue track expenses and improve my accuracy.  

 Cong! Well done! it is impressive you get your rahab cost estimation so accurate the first year. 

Wow, at first I thought this was sure to be a disaster with you jumping in to full time so quickly.  As I read on I was impressed with the post before I even saw the pictures.  Now that I see the pictures though it is clear where that 100k rehab went.  A lot of creative thinking going on in how to make these deals work too.  Great job, keep up the good work.

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