I just closed on my first flip in the Seattle area a couple weeks ago. I learned a lot in the process and even made some money. I ended up buying the property at the county auction. The property was a major hoarder house as you can see in some of the pictures below. After all the junk was removed it was a basic cosmetic rehab. The rehab ended up taking 4 weeks to finish. After placing the property on the market I had about 15 showings before I ended up accepting a full price offer 13 days after listing.
The biggest thing I learned through the whole process was to make sure every thing is in writing and agreed upon and signed before any work is started. I also recommend getting a couple different contractor quotes before agreeing to one and do your due diligence on the contractor. I ended up getting a recommendation and everything worked out alright but I will definitely do more due diligence in the future.
Here are the numbers.
Purchase Price - $158,500
Rehab Costs - $37,000
Sale Price - $252,500
Profit - $10,500
Here are some before and after pictures.
Congrats on completing your flip successfully! For being a first one too, you should be proud!
In every single deal you will learn something new and think about how a certain issue could be avoided or how to make the next transaction smoother.
Keep On Grinding!!
Great job on the flip!
Grats! Very beautiful work.
Great Job Ryan.
How did you estimate the rehab cost before purchase?
Congrats - looks great. We just closed Monday on our first property. Very inspiring!
Congrats Ryan :-)
And with a property bought from the auction too. I don't see too many success stories there! If anything, I see more horror stories than successes nowadays, like this one:
Curious why you only made $10,500 profit though, based on the numbers you provided. Seems like it should have been more? Was your financing costs overly expensive? Did you have to give seller concessions?
Nice job. I’m looking for my first flip now. They’re harder to find than I was thinking they would be.
I also am curious on why the profit was so low given your numbers. How did you finance this deal? Can you dig deeper into the numbers for us? Thanks and congrats on turning a profit while learning at the same time!
Excellent job for a first time flip.. MY hat's off to you. I'm going to assume that the profit (or lack there of) had something to do with some Hard Money Lending/Private Lender. They typically charge pretty high percentages on your first deal, due to lack of experience or whatever other excuse they come up with.
In any case, if you in fact did use "other people's money" to get this done, that just makes this that much sweeter.. Again, excellent job.
@Ryan Substad congrats man! Wow! How the hell did you do all of that for $37k?!?!? Great job.
That seems like a lot of work for $37k. Great job! I am wondering how you squeezed all that in the budget? Are you a wizard?
Awesome job! Definitely looks good. I see lots of these hoarder homes and have to say that the vision afterwards is hard for me to imagine...until now. :)
@Kulin Dakwala I bought the house through a company that goes to the auction each week so they helped with the rehab estimates for this one.
@Nghi Le @Brian G. Since I bought this house through a company that goes to the auction each week I had to pay them 3% of the purchase price so that was almost $5000. I also used a hard money loan which was 12% interest only payments and 2 points rolled into the loan. I also paid $6000 of the seller's closing costs (we raised the selling price of the house by $3000 to offset some of the cost.
@Shawn Ward @Pete Perez The trash out ended up costing $4000 but after that it was basic paint, flooring and fixtures. We were able to keep the kitchen cabinets and counters (we sprayed them with an epoxy finish that looks like stone counters which cut down on the price and looked really good) along with the laminate floors in the kitchen. Being able to salvage some of those things really helped keep costs down.
Congrats on your first flip @Ryan Substad !!! Thanks for sharing.
Now that you are officially an experienced investor (LOL) Would you use that company again? Or would you rather try to acquire a property another way?
Also, are you happy with the contractor? Or you are still going to explore other options?
@Jose Perez I would possibly use the same company again but I would probably be a little more conservative on my bids to get a greater profit margin. I'm also looking at other options for acquiring properties off the MLS and possibly some direct mail.
The contractor was alright but I think I'll explore other contractors for future projects.
Congrats on getting started, first flip is the toughest :)
What's your bottleneck in your business? Is it finding deals, or having the crew to work the deals. If it's finding deals, you can pursue other avenues like DM. If it's finding more crews to do the work, then you can continue using that company and bid less.
@Ray Lai Thanks. I would say the bottleneck right now is having enough capital to fund deals along with finding deals. I plan to do a DM campaign but I don't have enough capital to do multiple flips at a time.
That make sense, with the $10k profit you pulled you can easily do a large scale campaign and flip the juiciest and wholesale the rest. If you want a checklist of items you should prepare prior to your DM campaign or scripts on how to talk to sellers once your phones are ringing, I can hook you up.
Managing multiple flips is completely different than having the team you worked with already on your first flip. You need better processes and monitoring. It's Ok to build your trusted team and get some more deals coming your way and cherry pick the best and sell the rest.
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