My First Flip (with Pics!)- Small $$ Profit - Big Exp. Profit

80 Replies

Hi All -

My first flip closed yesterday, mostly cosmetic, and I wanted to share my experience with you guys. This was done in Massachusetts. I'll try to make it concise but it may get a bit lengthy!! I pretty much broke even with this deal and I want to share where I messed up and will be sure to catch next time around! Let's get started! The numbers first:

Purchase Price: $430,000 (Auction) (3 Normal Bed, 1 Master, 2 Full Baths, 1 Master Bath, Pool, Cathedral Living Room Ceiling, Attached 2 car Garage, Swimming Pool, 3500sqft on 1 acre)

Outstanding Town Liens: $94,000 (I knew this as this was announced at auction. I thought it was a mistake. But taxes are about 10-12k per year on this property and the previous homeowner was delinquent for several years)

Cash for Keys: $20,000 (The homeowner agreed to vacate by a certain date to avoid a drawn out legal process, which they threatened to do)

Cleanout: $750 (The place was a complete mess)

Initial Cleaning: $150 (I at least needed to get the place tidied up a bit before painters would come)

Kitchen Repainting / Spraying Makeover: $11,500

Fresh Paint on Most Rooms (Ceiling, Walls, Trims): $12,500

Hardwood Floor (Sand, Stain, Re-finish): $4,500 

New Carpets in all 4 bedrooms: $4,500

Lawn Debris and Hydroseed: $6,000 (and weekly lawncare until sale but that was cheap)

Electrician: $1,000 (Smokes Inspection and fixed a few recessed lights + other minor)

HVAC: $1,000 (Garbage Disposal Replacement, HVAC filter replacement + others

Window Cleaning: $500

Mold Remediation: $1,000 (Bathroom Ceiling)

Carpentry: $5,000 (Bunch of stuff)

Miscellaneous Materials: $2,000

Final Cleaning: $300

Staging: $4,500

New Washer and Dryer: $1,000 

Total: ~$600,200 (+- 2-3k)

Listed Price: 669,000

Sale Price: 644,500 

After broker + legal Proceeds: 606,000

Profit: ~6k 

Time Held: Bought in April, Roughly 6 Months.

I didn't make much from this deal, but the experience I got was awesome. I tried to cheap out on the hardwood floor vendor, so I got a lot of negative comments from buyers and had to wiggle on price. The painting of ceilings was also unnecessary in hindsight, and think I could've gotten away with that. I also did a lot of the above things sequentially, instead of having multiple vendors in the house at the same time. I think I could have gotten away with certain items, especially the landscaping. I did that too late and needed to wait 3 weeks for the sprouting so it would show better.

PICTURES (BEFORE)

AFTER PICS

Medium sbpm logoVictor Eng, Scudder Bay Property Management | 781‑462‑5537 | http://www.scudderbay.com

Congrats good job. keep it up how did you fund it? if you dont mind me asking

@Victor Eng the place looks great! Cash for keys is a killler, its shameful people out there will threaten a drawn out legal process after the didn't pay $94k worth of taxes! If you don't mind me asking how did you find this property and what town was this in? 

That is a good looking renovation.  The kitchen and the floors look phenomenal.

That's great! and you have a very good attitude about what must have been a somewhat stressful experience. The floors look good in the photographs, but that's not the same as seeing them in person of course... what did you do, and what would you have done differently with them?

Medium team zen logo vJean Bolger, 33 Zen Lane/Team Zen | http://www.solidrealestateadvice.com

Originally posted by @Jabari Piper :

Congrats good job. keep it up how did you fund it? if you dont mind me asking

It was not personal funds. It was off of the company I'm working for LOC cash.

Medium sbpm logoVictor Eng, Scudder Bay Property Management | 781‑462‑5537 | http://www.scudderbay.com

Originally posted by @Patrick Gleason :

@Victor Eng the place looks great! Cash for keys is a killler, its shameful people out there will threaten a drawn out legal process after the didn't pay $94k worth of taxes! If you don't mind me asking how did you find this property and what town was this in? 

It was an auction repurchase as my company had interest on the underlying mortgage note. This didnt give us an advantage or anything as the next highest offer at auction was 415k or so. Rather not release town information, but if youre from MA, you can do a quick MLS search and get your answer.

Medium sbpm logoVictor Eng, Scudder Bay Property Management | 781‑462‑5537 | http://www.scudderbay.com

Originally posted by @Jean Bolger :

That's great! and you have a very good attitude about what must have been a somewhat stressful experience. The floors look good in the photographs, but that's not the same as seeing them in person of course... what did you do, and what would you have done differently with them?

 Thanks! Ugh, it was too much effort for too little $. As I say earlier though, the experience was important so that I can profit more next time. Basically, the finished floors were not that great with some streaks and varying tones of stains. I was quoted mutiple prices, from 1.50 a sqft to 2.25. The hw floors were roughly 2700 sqft or so, so I went the cheap route to save 75 cents per sqft. I will never compromise quality the next time I do this, especially not on floors.

Medium sbpm logoVictor Eng, Scudder Bay Property Management | 781‑462‑5537 | http://www.scudderbay.com

Yep, it's really hard to get even toned stain. It might not have looked that different even if you went with the pricier quote. Personally I like a varied look, but not every one does. I'm no expert by any means but I think if you really want a even-toned dark floor you have to go with the prefinished engineered stuff

Medium team zen logo vJean Bolger, 33 Zen Lane/Team Zen | http://www.solidrealestateadvice.com

Great job... the honest ones out there will also tell you that most of us don't make much money on the first flip... it is as you said you learn an awful lot in the first flip

@Victor Eng I like how you just painted the kitchen cabinets, saves money and looks like a brand new kitchen. It looks like you saved the original granite as well, bravo. Don't beat yourself up over the floors too much. Theres a flip in my neighborhood going for 675k and they left all the original flooring- Un level floors with 1/4"-1/2" gaps to add "character" which I think is a great response! 

Outstanding, I like the colors, and over all look. congratulations on your 1st flip. 

I'm not in your market. Nor have I done a house in that price range. But those prices are like 5x what I'd pay. Even with twice the amount of cabinets and 3 times the Sqft I don't understand how it could be so much. Except the floors, that's a really good number for a true sand, stain, and poly.

Next time get 10 bids. Or maybe that's just Mass.

Originally posted by @Josh C. :

I'm not in your market. Nor have I done a house in that price range. But those prices are like 5x what I'd pay. Even with twice the amount of cabinets and 3 times the Sqft I don't understand how it could be so much. Except the floors, that's a really good number for a true sand, stain, and poly.

Next time get 10 bids. Or maybe that's just Mass.

 The interior painting was a bit pricey in my opinion as well, but the kitchen cabinets refinishing with spray paint was very well done and was the focal point of the house (kitchen).

Yes, we should have waited it out, but we needed a fast close and didn't risk waiting. We did include a kick out clause and had another buyer come in at 660k 2 weeks after our first offer. But the original buyers waived their contingency and we had to go with the same deal. It would've been a 15k profit increase. Sad =[

Medium sbpm logoVictor Eng, Scudder Bay Property Management | 781‑462‑5537 | http://www.scudderbay.com

The prices seemed about right for my area, besides the kitchen makeover. And I pay $2.50/sq foot for hardwood refinishing but the guy I use is a miracle worker, I've had some horrible floors that came out amazing.

It looks beautiful, great job!

Medium bricksmortargroup300Stephanie Goodman, Bricks + Mortar Group

And $20k cash for keys seems excessive!

Medium bricksmortargroup300Stephanie Goodman, Bricks + Mortar Group

That is an insane amount of money to risk for a first deal, kudos to you for going out and making it happen! It's also good you have a good attitude after the minimal profit. You learned a lot and still ended up making money on the deal, I'd call that a win any day. Now you know a lot more for going into that next investment! Again, great job on actually pulling the trigger. Phenomenal story and it's great you listed out all the numbers. True motivation!

@Victor Eng , good for you, you pretty much ended up with a free education.  With a first deal, that's not such a bad situation, it could easily have gone the other way.

I think you paid way too much for the painting, start looking for painters now for future deals.  The Sistene Chapel comes to mind.

Also, it appears that you significantly over-estimated the ARV. There is no support in that town for your original listing price of $699,900 (from the MLS listing). Over pricing a property is a good way to lose money and is one of the most common mistakes that new flippers make. So you have lots of company, no criticism of you intended. Just a lesson learned.

@Stephanie Goodman , this is MA, and 20K Cash for Keys is not unusual, especially with a previous foreclosed owner as the occupant.   See the thread Can't Evict Squatter.  Some title companies won't even insure title if there is a previous owner in residence in MA.  

Medium small logoAnn Bellamy, Buy Now, LLC | 800‑418‑0081 | http://www.buynowhardmoney.com | Podcast Guest on Show #9

The place turned out great!  Like you, I have just finished my first flip and the amount of education received is incredible.  You made $6k, you got some bragging rights for a job well done and you learned a lot.  I'd call that a win for a first time. 

Congrats on doing a flip. Just getting that first one in is a huge step to take and most people never get even that far. 

My first flip was break even (I think I would have made $2,500 but I bought a lot of tools and decided to call it a wash). The education from it was invaluable. I was much more comfortable going into my second flip given what I had learned from the first one. 

Medium old glory logoDoug W., Old Glory Property Solutions LLC | [email protected] | 571‑620‑2468 | http://www.instagram.com/oldglorypropertysolutions

Lovely house, that 20k for keys Geesh... Im not sure i could done that my pride would  of made me fight it out.

Seem like a lot of work when I was reading your thread but from the pics it seemed like updates mainly, with the exception of the mold remediation of course. As I'm most certain the majority will touch on - the $20 grand cash payment for keys is an absolute deal murderer! The finish product looks fab and I wish you much success on your next venture. Hopefully if cash for keys is necessary it will be a mere fraction of what it cost here.

Kudos,

Mary

Looks phenomenal! Great job!

congrats on taking action

No comment regarding $20,000 for keys 

Jenkins Ramon, JMWPS Ventures, LLC | [email protected]

Great job Victor !

I feel that even if you didn't make as much cash as you feel that you could have the experience that you collected is priceless , the place looks Great . Keep moving forward and I wish you all the success in world.

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