Closed on my 4th flip

11 Replies

Hey BP!

I finally closed on my 4th successful flip two weeks ago and wanted to share it. I've been a fix and flip investor for 2 years now and I successfully flipped 3 houses my first year. My goal this second year was to double that and flip 6 but unfortunately I was only able to do one this year. I had two flips going on this year but only completed the one I just closed on. The main reasons why I wasn't able to reach my goals were not having enough partners to do deals with (I don't have the capital to do them on my own. I've come across good deals I couldn't move forward with because I did not have available funds), not being able to find deals that had good margins, and having most of my own personal funds tied up on my first out of state flip that completely took a turn for the worst which I'm still currently working on. My out of state flip would make for my 5th one which was supposed to be done this year. 

Living in a market like L.A. makes it very hard to do business in as a new investor. Inflation is insane, competition is fierce, and wholesalers who have deals under contract hardly leave any meat on the deal for the investors. The sad thing is that these wholesaler are able to continue doing business this way because there are investors who are actually buying the deals at such high purchase prices. Some of them are new investors who don't know what they're doing and the others are seasoned investors who fix n flip for a living and get desperate for the next deal so they'll buy even if they're only making sometimes as low as $10-$15k net profit on one deal. The average price range of a fix n flip home in the LA market is about $400-$500k (purchase price). Even at a $30k net profit return (which is the average return for most flips) I think it's absolutely absurd to put half a million dollars on the line for that kind of a return. 

All this to say that although I did not meet my goals this year, I have learned so much and have met so many great new people/connections. I've met new passive investor partners and I've made connections with people (agents and wholesalers) who can actually bring me some decent deals in my local market. Right now my biggest obstacle is getting my out of state flip squared away but I feel pretty damn good that next year will be absolutely different and I will be a lot stronger to be able to accomplish my new goals. Although I very much enjoy and have passion for home design and flipping, I've decided I'm going to shift most of my focus on finally purchasing rentals for cash flow to achieve financial freedom. The thought of achieving financial freedom and being able to pursue my passion with flipping later on without having to worry about income for my family to live off of is much more appealing to me right now than to pursue my passion now and have to worry about income coming in when I don't have a flip going on. Specially with so much talk about the correction we are expecting, I'm going to assume that LA will be hit the hardest because of its inflation. I'll definitely continue flipping in LA but I'm not actively searching, if a deal falls on my lap then I'll take it with my partner.

Anyway, enough of my rants, here are the deets on my most recent flip. This was a wholesale deal through a friend. It was his grandparents house and they wanted to sell it. I didn't want them to feel that just because I was a close family friend that they would have to sell it to me for some absurdly cheap price (although it would've been nice) so I had them get offers from local investors who'd been soliciting them to buy their house. I told them I would match the highest offer. 

Here are the numbers:

3 bed/ 2 bath 1,571/5,396 sq ft. (House was in Highland Park, Los Angeles)

Purchase price: $600k

Rehab: $94k - Full rehab: new layer of shingles on roof, 13 new windows, all new doors, new laminate floors, new 3' front retaining wall, full gut kitchen (new cabinets, quartz countertops, tile backsplash), 2 full gut bathrooms (new tub, floor tiles, wall tiles, vanities, faucets, toilets, vanity lights), converted one closet into a washer/dryer closet, created a master ensuite with a hallway bath, opened up some walls, recessed lights throughout, scraped popcorn ceiling, installed new HVAC, interior paint, exterior paint, stucco repair, new landscaping front and rear of house, new wrap around deck, installed double french doors master bedroom and garage, to new tankless water heater, new exterior lights, updated light plumbing and electrical, new garage door with motor, and some other normal repairs like replacing drywall, floor boards, and replacing some wood trims like facia boards.    

Holding costs and HML fees: $52k

Sale price: $899k

Agent commission: $40,455 (4.5%)

Closing costs: 12,000

Net profit: $100,545 (split 60/40. I get 40% because I had no money in this deal but I brought the deal, I used my resources to do the rehab, designed and project managed the project. My partner brought the capital for the downpayment on the HML, paid for the holding cost, paid for labor and material so he gets 60% for taking all the financial risk)

This is the best deal I've done. I was pretty happy specially not having any money into the deal. 

I haven't been able to sort out the pics yet but once I do, I'll update this post.

Let me know what you guys think. I welcome any advice and/or constructive criticism that will help me be better.

Before: https://app.box.com/s/dfdkikbmlww9lbfpiyqdb645ei4y...

After: https://app.box.com/s/nih9v8m5r9e97sibapsroj3aimaf...

Collage: https://app.box.com/s/0pdpd32qe9xvql5gd1vb3icoeh62...

Updated 5 months ago

Hey guys, here are the links to the photos: Before: https://app.box.com/s/dfdkikbmlww9lbfpiyqdb645ei4ylvzu After: https://app.box.com/s/nih9v8m5r9e97sibapsroj3aimafok0n Collage: https://app.box.com/s/0pdpd32qe9xvql5gd1vb3icoeh62utbo

Updated 5 months ago

Hey guys, here are the links to the photos: Before: https://app.box.com/s/dfdkikbmlww9lbfpiyqdb645ei4ylvzu After: https://app.box.com/s/nih9v8m5r9e97sibapsroj3aimafok0n Collage: https://app.box.com/s/0pdpd32qe9xvql5gd1vb3icoeh62utbo

usually before and after pics get the most traffic.  that's why I came here to see the lovely photos of the finished work. congrats on a successful flip and many more to come. 

kudos,

Mary

Thanks for the detailed post!  And great job on the flip!!  Look forward to seeing the pictures and maybe a further breakdown on the rehab costs.

It's interesting to me that LA has some of the highest RE prices in the US (I think).  A house that size in a decent neighborhood around here would be worth maybe $250k.  It sounds like you turned that into a beautiful top of the line home with all of your renovations.  I'm not sure you could spend $95k fixing a flip here.  I ran the numbers in my head as I read your paragraph on the reno and guesstimated it as I went and totaled up to $90k.

This post has been removed.

@Mary B. link to pics are on my reply above.

@Rick Strobel yes it's absurd the inflation here which is why I'm no longer actively searching for a deal. I feel I've made enough connections with people who can bring me "real" good deals and I can just wait until they fall on my lap while I focus on other opportunities in other markets.

wow, from the pix looks like it came out great! 

I agree with you that flips aren't where it's at, the rentals (and income from this, plus appreciation) make more sense long run.  I had been doing rentals and wanted to try a flip.  I succeeded (just posted about it), but ultimately would like to go back to doing rentals.  Lot more pluses with rentals in my eyes now. 

Best of luck! 

Congrats @Adriel Liwag ! Nice job! Can't even tell it's the same house!

Nice work Adriel!

@Adriel Liwag that looks amazing! Great Job! I’d love to potentially get involved in a future flip. PM me if you’re interested

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