My First Flip in Florida! With Photos! The house is sold

48 Replies

The really invaluable part of this experience has been education. I and my wife who was a designer of the project have learned a lot. We certainly made mistakes along the way, however understanding what went wrong provides important lessons for the future.

Purchase Price: $207,000

Closing Costs: $7,625

Labor: $27,800

Material: $33,510

Landscaping: $5,600

Staging: $2,000

Total project cost: $283,535

Sold: $304,500

Agent's commission: $8,840

Selling closing cost: $6,500

Given that some of the money was borrowed I have this project in the red. Well, you know that tuition and fees vary from college to college.

Now on to the photos:
Exterior Before:


Exterior After:


Interior Before:

Interior After:

Thanks for checking out my progress so far and good luck to all!

@Nikolay Izmerli thanks for sharing man! I broke even on my first flip and lost money on the second one, so you're not alone. The rehab looks incredible and you can chalk that loss up to a hands on education in REI.

Care to share - what did go wrong? Was the end value less, rehab more, or some combination of the two? What was the biggest surprise? How did you finance? How many days from entrance to exit? What’s next for you?

I would buy that house in a heart beat!  Beautiful job!  I'm sure you will make more money on the next one after what you learned.  Best of luck to you!  

Originally posted by @Andrew Davis :

@Nikolay Izmerli thanks for sharing man! I broke even on my first flip and lost money on the second one, so you're not alone. The rehab looks incredible and you can chalk that loss up to a hands on education in REI.

Care to share - what did go wrong? Was the end value less, rehab more, or some combination of the two? What was the biggest surprise? How did you finance? How many days from entrance to exit? What’s next for you?

What did go wrong?
Combination of the two: value less, rehab more. Apollo Beach, Ruskin, Riverview is a slower real estate market. It’s not unusual for the properties to sit on the market for 2-3 months in this neighborhood. I knew it, and a long time ago I decided to not invest there. Yet the purchase price of 207k seemed to be right, and from the looks of it, it didn’t need a ton of work. The condition of the roof and AC was good. I had As-Is BPO for 285k from two independent agents. Everyone's telling me it's a dream flip. It was in August 2018. I got 358k in the appraisal report on 11/15/18 after we completed the renovation and put the house on the market with the list price of 350k. Then November, December, January, February have traditionally been slow months especially in this area. In April 2019 when the house didn’t sell for 310k, I listed it myself for 305k, and in two weeks it was under contract.

What was the biggest surprise?
How I was wrestling with myself. I once decided to not invest in Apollo Beach, Ruskin. Don’t listen to nobody, trust your instincts.

What’s next? Next flip.

Great design.  I would buy this home.  Really beautiful work.  Really love "tuition varies from college to college", so true.  If you can track what you did right and what you could do better next time, you'll always be moving forward.  Congratulations on a really great looking project.  Here's to your future success!

@Nikolay Izmerli wow I'm in your same shoes, looking at properties in Ruskin and drooling over what you get for the price. Although I think if you BRRRR'd it, it'd be a home run for you! That area is growing faster than any in Tampa area, and you'd get your cash back out to keep moving! Thanks for being vulnerable, good stuff!

@Nicolay Izmerli Did you ever consider other options? It sounds a little that you were very convinced that you could only do a flip. Could you have done a chash-out refi, use the funds for your next flip and rent the beautifully renovated place either long term or as a vacation rental? Just curious.

The original pics show a place that looks perfectly livable. A bit boring, but not bad. Was there something about the house that was awful that just doesn't show that justified the flip? 

I guess my thought is that the original sales price was based on original condition. If you were pulling out serviceable 2010 fixtures, cabinets etc that still had value you were losing that value. It affects the whole profit equation if you are doing a "restyle" rather than a "rehab". The results ARE gorgeous though, and good call on spiffying up the garage, as long as that wasn't a terribly expensive project. Simply painting garage walls in a semi-gloss white & cleaning oils stains off the floor say "this house was nicely maintained" and are among the cheapest things you can do after removing trash & mowing the lawn.

One under your belt at least gives you a more "legit" standing with lenders, contractors, etc, on the next one. Smart of you to factor in the holding costs - I don't think everyone thinks of that. 

ps - Pro photos, & staging - good call! The finished product looks amazing - the only question was it over-improved for the location.

So, the rehab looks gorgeous. A couple comments though:

You bought this house with slightly more than $100K in equity, those numbers were tight from the go.

Also, an appraisal without a buyer is absolutely completely worthless. So I’m not sure where you’re getting your “appraised value” that it sold so much less than, but I’ll bet any money it was in line with comps. So I’m betting you had a bad agent when you bought it (if you relied on an agent for comps) and/or you didn’t work with an agent and  being inexperienced at this you didn’t know what to look for in the way of resale inhibitors, or even look hard enough at the comps, it’s on you if you went about it without an agent or chose not to listen to them.. because ultimately it sounds like you over projected your re-sale price from the outset and as a result spent too much money on both the house and the rehab. Learn how to get better at projecting your resale value and keeping your costs in line and you will not have the same problems next time.

Originally posted by @Deanna Opgenort :

The original pics show a place that looks perfectly livable. A bit boring, but not bad. Was there something about the house that was awful that just doesn't show that justified the flip? 

I guess my thought is that the original sales price was based on original condition. If you were pulling out serviceable 2010 fixtures, cabinets etc that still had value you were losing that value. It affects the whole profit equation if you are doing a "restyle" rather than a "rehab". The results ARE gorgeous though, and good call on spiffying up the garage, as long as that wasn't a terribly expensive project. Simply painting garage walls in a semi-gloss white & cleaning oils stains off the floor say "this house was nicely maintained" and are among the cheapest things you can do after removing trash & mowing the lawn.

One under your belt at least gives you a more "legit" standing with lenders, contractors, etc, on the next one. Smart of you to factor in the holding costs - I don't think everyone thinks of that. 

ps - Pro photos, & staging - good call! The finished product looks amazing - the only question was it over-improved for the location.

There's one issue I should mention. I bought this house for $207,000 in August 2018. In June 2018 it failed to sell with an agent at $239,000 in the same condition. By the way, it was a red flag that I deliberately ignored, and that's another discussion. Either way, I ruled out the idea to fix it up a little bit, and try to resell for $259,000. The latest was exactly someone told me I could do "based on comps", but I wasn't sure it would work. I agree it was a lot of "restyle" rather than a "rehab" though

 

@Nikolay Izmerli - love the brutal honesty/self reflection, I need some more of that in my life. David Goggins calls it an AAR (After Action Report) 

https://medium.com/@ezpromisel/the-cant-hurt-me-challenge-10-missions-from-david-goggins-to-callous-the-mind-a8d519042d54

Where you get real honest about everything that went wrong. I need to do a better job of this in my life/business, can't wait to see your next one!

@Nikolay Izmerli

Education always costs! Next one I’m sure will be better knowing what you do now! Overall you did more than a fantastic job on the interior and exterior. Over improving is what some of us like to do Bc it’s a reflection of our design/work however when flipping it can make or break the deal. Move on from this and make the next one count, your talent is surely displayed on your first flip!

Originally posted by @Melanie Pursglove :

So, the rehab looks gorgeous. A couple comments though:

You bought this house with slightly more than $100K in equity, those numbers were tight from the go.

Also, an appraisal without a buyer is absolutely completely worthless. So I’m not sure where you’re getting your “appraised value” that it sold so much less than, but I’ll bet any money it was in line with comps. So I’m betting you had a bad agent when you bought it (if you relied on an agent for comps) and/or you didn’t work with an agent and  being inexperienced at this you didn’t know what to look for in the way of resale inhibitors, or even look hard enough at the comps, it’s on you if you went about it without an agent or chose not to listen to them.. because ultimately it sounds like you over projected your re-sale price from the outset and as a result spent too much money on both the house and the rehab. Learn how to get better at projecting your resale value and keeping your costs in line and you will not have the same problems next time.

To my knowledge many top agents (who are not your average realtors) will tell their sellers it's a good idea to get an appraisal before listing the house. Okay, I realize that appraisal is art not science. My point is it won't hurt. It's another opinion, so why not? The appraisal that I received, wasn't high art, and that's another discussion. As for going about it alone. Well, I always try to go into the deal having one or better two more opinions from the best possible experts I can reach at the moment. Then being the agent myself I listed the house with one of the top producers real estate agents in the area (Apollo Beach, Ruskin, Riverview). I brutally used MLS statistics to find him. Before anyone says it, it's not his fault. I can use my head too. Agree that we spent too much money on both the house and the rehab

 

@ Nikolay Izmerli, Op, I think you did a great job on this flip. I am a big fan of modern design and get rid of same old stuff. I would not interested in buying the property in the original condition (typical stuff with no taste of design). I guess you may think about your target client next time before you budget your flip. For many things upgrades I see on those pics, many 500K or even 700K house in FL do not have that kind of upgrades. So, I would recommend you focusing on either high end flip (well, it tests your confidence on the real estate market) or lower end ones. 

Originally posted by @Andrew Davis :

@Nikolay Izmerli - love the brutal honesty/self reflection, I need some more of that in my life. David Goggins calls it an AAR (After Action Report) 

https://medium.com/@ezpromisel/the-cant-hurt-me-challenge-10-missions-from-david-goggins-to-callous-the-mind-a8d519042d54

Where you get real honest about everything that went wrong. I need to do a better job of this in my life/business, can't wait to see your next one!

 Thanks Andrew. Yep, AARs is what military do. Anyway, it's just a business in the end. Next one will be in St. Petersburg

Originally posted by @Nikolay Izmerli :
Originally posted by @Melanie Pursglove:

So, the rehab looks gorgeous. A couple comments though:

You bought this house with slightly more than $100K in equity, those numbers were tight from the go.

Also, an appraisal without a buyer is absolutely completely worthless. So I’m not sure where you’re getting your “appraised value” that it sold so much less than, but I’ll bet any money it was in line with comps. So I’m betting you had a bad agent when you bought it (if you relied on an agent for comps) and/or you didn’t work with an agent and  being inexperienced at this you didn’t know what to look for in the way of resale inhibitors, or even look hard enough at the comps, it’s on you if you went about it without an agent or chose not to listen to them.. because ultimately it sounds like you over projected your re-sale price from the outset and as a result spent too much money on both the house and the rehab. Learn how to get better at projecting your resale value and keeping your costs in line and you will not have the same problems next time.

To my knowledge many top agents (who are not your average realtors) will tell their sellers it's a good idea to get an appraisal before listing the house. Okay, I realize that appraisal is art not science. My point is it won't hurt. It's another opinion, so why not? The appraisal that I received, wasn't high art, and that's another discussion. As for going about it alone. Well, I always try to go into the deal having one or better two more opinions from the best possible experts I can reach at the moment. Then being the agent myself I listed the house with one of the top producers real estate agents in the area (Apollo Beach, Ruskin, Riverview). I brutally used MLS statistics to find him. Before anyone says it, it's not his fault. I can use my head too. Agree that we spent too much money on both the house and the rehab

  

Well I’m a fairly decently producing agent and a 5-year flip investor and can tell you that appraisal without a buyer is worthless. No top agent will tell you to get a bank appraisal as a good determiner of listing price. What a bank is willing to lend on something and what a buyer is willing to pay for it are different things. I can’t tell you how many times I’ve seen sellers overprice outrageously because of some stupid appraisal they got and they can’t even sell it for $100,000 less than that. It can hurt, actually, because the more you overprice the longer it takes to sell and the less you get.. you are actually better off under-pricing below market and getting multiple offers because the market will set the price of its worth at that point. Comps are the best predictor of sale price, save your money on the appraisal.

Originally posted by @Melanie Pursglove :
Originally posted by @Nikolay Izmerli:
Originally posted by @Melanie Pursglove:

So, the rehab looks gorgeous. A couple comments though:

You bought this house with slightly more than $100K in equity, those numbers were tight from the go.

Also, an appraisal without a buyer is absolutely completely worthless. So I’m not sure where you’re getting your “appraised value” that it sold so much less than, but I’ll bet any money it was in line with comps. So I’m betting you had a bad agent when you bought it (if you relied on an agent for comps) and/or you didn’t work with an agent and  being inexperienced at this you didn’t know what to look for in the way of resale inhibitors, or even look hard enough at the comps, it’s on you if you went about it without an agent or chose not to listen to them.. because ultimately it sounds like you over projected your re-sale price from the outset and as a result spent too much money on both the house and the rehab. Learn how to get better at projecting your resale value and keeping your costs in line and you will not have the same problems next time.

To my knowledge many top agents (who are not your average realtors) will tell their sellers it's a good idea to get an appraisal before listing the house. Okay, I realize that appraisal is art not science. My point is it won't hurt. It's another opinion, so why not? The appraisal that I received, wasn't high art, and that's another discussion. As for going about it alone. Well, I always try to go into the deal having one or better two more opinions from the best possible experts I can reach at the moment. Then being the agent myself I listed the house with one of the top producers real estate agents in the area (Apollo Beach, Ruskin, Riverview). I brutally used MLS statistics to find him. Before anyone says it, it's not his fault. I can use my head too. Agree that we spent too much money on both the house and the rehab

  

Well I’m a fairly decently producing agent and a 5-year flip investor and can tell you that appraisal without a buyer is worthless. No top agent will tell you to get a bank appraisal as a good determiner of listing price. What a bank is willing to lend on something and what a buyer is willing to pay for it are different things. I can’t tell you how many times I’ve seen sellers overprice outrageously because of some stupid appraisal they got and they can’t even sell it for $100,000 less than that. It can hurt, actually, because the more you overprice the longer it takes to sell and the less you get.. you are actually better off under-pricing below market and getting multiple offers because the market will set the price of its worth at that point. Comps are the best predictor of sale price, save your money on the appraisal.

I can tell you more, Melanie. Right now I'm representing, among others, two sellers of the commercial real estate that overpriced in my opinion. They got the appraisal reports and want to stick to them. While getting an appraisal prior to commercial listings is common, it's to the point of discussion. By the way I never mentioned the appraisal for the buyer who has yet to come, as well as a bank appraisal. What I'm talking about is the appraisal for seller. Certainly an appraisal is just another opinion. Sometimes, the seller and the agent might not agree on a price. Then getting the appraisal is a must. I appreciate your input and expertise 

Ah - didn't move at $239k in orig condition. I guess if I were a buyer I'd be checking Zillow (public info, after all) and seeing the just-completed $207k sale, I'd figure that was what the property was "worth" and my first, knee-jerk reaction would be that the extra $32k price hike for "nothing added" is you trying to rip me off-- that might be just me though. 

The final product IS amazingly pretty -- where does the ending sale price & finishes place it on the area comps? Middle of the pack? Upper 1/4 percentile (by total or per sq ft?

ps -- I think when you do the same thing with a property in a higher price area you'll kill it, as long as the economy/fed don't do anything stupid while you are in the middle of the project. Also, if this project isn't in your wife's portfolio it should be -- she hit it right on with the style.  

Originally posted by @Nikolay Izmerli :
Originally posted by @Melanie Pursglove:
Originally posted by @Nikolay Izmerli:
Originally posted by @Melanie Pursglove:

So, the rehab looks gorgeous. A couple comments though:

You bought this house with slightly more than $100K in equity, those numbers were tight from the go.

Also, an appraisal without a buyer is absolutely completely worthless. So I’m not sure where you’re getting your “appraised value” that it sold so much less than, but I’ll bet any money it was in line with comps. So I’m betting you had a bad agent when you bought it (if you relied on an agent for comps) and/or you didn’t work with an agent and  being inexperienced at this you didn’t know what to look for in the way of resale inhibitors, or even look hard enough at the comps, it’s on you if you went about it without an agent or chose not to listen to them.. because ultimately it sounds like you over projected your re-sale price from the outset and as a result spent too much money on both the house and the rehab. Learn how to get better at projecting your resale value and keeping your costs in line and you will not have the same problems next time.

To my knowledge many top agents (who are not your average realtors) will tell their sellers it's a good idea to get an appraisal before listing the house. Okay, I realize that appraisal is art not science. My point is it won't hurt. It's another opinion, so why not? The appraisal that I received, wasn't high art, and that's another discussion. As for going about it alone. Well, I always try to go into the deal having one or better two more opinions from the best possible experts I can reach at the moment. Then being the agent myself I listed the house with one of the top producers real estate agents in the area (Apollo Beach, Ruskin, Riverview). I brutally used MLS statistics to find him. Before anyone says it, it's not his fault. I can use my head too. Agree that we spent too much money on both the house and the rehab

  

Well I’m a fairly decently producing agent and a 5-year flip investor and can tell you that appraisal without a buyer is worthless. No top agent will tell you to get a bank appraisal as a good determiner of listing price. What a bank is willing to lend on something and what a buyer is willing to pay for it are different things. I can’t tell you how many times I’ve seen sellers overprice outrageously because of some stupid appraisal they got and they can’t even sell it for $100,000 less than that. It can hurt, actually, because the more you overprice the longer it takes to sell and the less you get.. you are actually better off under-pricing below market and getting multiple offers because the market will set the price of its worth at that point. Comps are the best predictor of sale price, save your money on the appraisal.

I can tell you more, Melanie. Right now I'm representing, among others, two sellers of the commercial real estate that overpriced in my opinion. They got the appraisal reports and want to stick to them. While getting an appraisal prior to commercial listings is common, it's to the point of discussion. By the way I never mentioned the appraisal for the buyer who has yet to come, as well as a bank appraisal. What I'm talking about is the appraisal for seller. Certainly an appraisal is just another opinion. Sometimes, the seller and the agent might not agree on a price. Then getting the appraisal is a must. I appreciate your input and expertise 

If the seller and the agent can’t agree on a price, an appraisal is not going to “solve the problem”. Ultimately it’s the seller’s decision, but as a seller you should really be listening to the agent and looking hard at the comps they’ve pulled. You should be interviewing several agents actually and finding one who knows your area the best, who can articulate the comps the best. This does not always mean the agent who throws out the highest listing number, (though this is often the agent who gets the business sadly). There is a common misconception that agents want to underprice your house because it makes no difference in their commission and the quick sale is better for them.. when in actuality what we know is that the quick sale is better for you, especially as an investor. The longer your house sits on the market the less you get and the more the eventual buyer can twist your arm. Instead of chasing the market you want the market to chase you and compete for you. 

Ultimately it’s important to remember that neither you, nor your agent, nor even an appraiser sets the price for your house: the market does. The list price is simply what you are telling the world you want for it to let it go, it speaks to your motivation. Motivated buyers don’t want to work with unreasonable people which is what they think of you when you are overpriced; that’s why they don’t even bother to make lower offers until you publicly lower the price. 

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