I am new to the community but have been reading up on RE for over a year now. I am active duty Air Force and am currently stationed in NJ. I have been itching for months to get into the RE game but have been reluctant due to the expensive NJ market and the fact that I will be forced to move for the Air Force within the next 2 years. My initial plan was to save a pot of money and really dive in to RE at my next location. Well…I am not a sit back and wait kind of guy. After some discussion with my wife we decided to try our hand at a live in flip while in NJ.
We decided we would go ahead and jump into this endeavor for several reasons. 1) Next place we go we don’t want to be completely new to the home buying and rehabbing process. 2) I am good with my hands and could use a live in flip as an opportunity to learn about the costs in rehabbing a house first hand. 3) The NJ market has been slower to recover than many places in the country and we thought that with the right property we should be able to turn a profit if we play our cards right!
After a few months of searching we found an estate sale that was listed at (what we estimated and later confirmed with my RE mentor and agent) near 25-30% below market value as is. It was selling just under $200,000. Comparing it to some similar homes in the area it appeared that its ARV would sit somewhere around $300,000 not accounting for 1-2 years of appreciation (if we should be so lucky). The property was on roughly an acre of land and zoned to some of NJ's best schools. The home is also part of one of the more desired towns in NJ.
My wife and I jumped on the opportunity and put in an offer based on pre-approved VA financing. Long story short the house was ours in a month with very little money down thanks to a VA loan. I am currently deployed and educating myself on the costs of rehab and the scope of work. I will use this post to detail and chronicle my experience with my first house/flip/RE deal.
My goal is to sell this house in the next 2 years for a profit (covering the complete costs of owning it for 2 years and rehab) and learn as many lessons as I can about the RE process and rehabbing. At my next location I will use the money (as well as most of my other savings) to dive into long term rental investing.
Well finally back from deployment!! Instead of taking some time off and unwinding I decided to paint the entire main living area with my wife. I have done a fair share of paining in the past but it has been a while and I greatly underestimated how long it would take. The place already looks 10 times better with a fresh coat of quality paint. I also changed out several severely outdated chandeliers. There are 2 large trees in the back yard that are leaning over the house and I am working to have a tree service company remove them as soon as possible. They are fairly large and it will be difficult to remove them over my house so I estimate it will run 2-4k. I have gotten a quote on replacing the windows...19.5K... Ridiculous! A quarter of that cost would go to the custom sliding glass door that is necessary because the rough opening is HUGE! I instead plan to bring in the wall from the side and top and buy a nice normal sized sliding door. Even with the cost of making the R O smaller I will save a few thousand.
Anyone have any great tips for negotiating prices down with contractors besides just getting multiple estimates?
Find out from you local reia some local contractors that do awesome work and are not expensive. Also have your contracts read the job needs to be done by such and such a date and anytime after will result in a payment decrease. NEVER EVER pay them before the work is DONE!!! Good luck and THANK YOU for your service.
I second what @Laurie Johnson said about never paying them until the work is done. Hold back 10% or so as the final check, payable only when all items from your punchlist have been completed.
Also, before you pay the final amount, make sure you get a signed lien waiver from every person who worked on the property so you don't pay twice.
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