My First flip- Finally under contract

39 Replies

Hello everyone, 

I'm finally under contract, the property is in Glenwood,IL. I've been waiting for this moment for +1 years. I'm very excited and scared, I haven't even closed yet and I have a hard time sleeping some nights. 

Here's some specifics of the deal: 

Property Price: 56,100   3BD/2BA   SQ FT: 1,485 Style: Split level with sub basement

Closing date: 10/19/15

Rehab: 60-65K

Expected ARV: 160,000

I walked through the property with 3 different contractors. Everyone agreed the project costs would be somewhere between 60-65K. My current profit projection is between 12,000-24,000. 

Any tips you guys can give me during the process? This is my first flip , any advice would be greatly appreciated. 

@John Dombrowski I'm going to be financing about 60K of the total project costs with a hard money lender. Interest rate is 17 % (No points). I will fund the rest of the project by myself. I'm also expecting to get my RE License soon and I will be able to save 2.5 % on commission costs. 

Property taxes are about 6k a year (3k for the holding period) and I'm expecting to hold the property for no more than 6 months. I'm assuming utilities will run for about 1,000, Insurance 800. Assuming it sells for 150K, I'll still be making around 12K. If I list it at 162k and it sells, I'm coming with the 24K profit.

I don't have the project worksheet with me. I'll upload it later this week.

@Bryan Schultz I found the property on redfin. I've been looking for properties in the southside suburbs of Chicago for a while now. Property was on and off the market for a while. Fannie Mae dropped the property price to all the way to 69K. I offered 61K and they accepted the offer. Then I realized I had underestimated my rehab costs so I asked for a price reduction. We finally settled at 56,100. We are going to be closing on October 19. I'll try to upload some pics today

Congratulations Account Closed. I'm also awaiting pictures of your progress. Thank for the before pictures.

                            Enjoy as you prosper.....

Quick update, I just close on the property this past Monday. My plan this week is to have the property insured, activate utilities, pulling permits and decide whether or not I'll be using a contractor. The contractor is charging me 11 % of the total rehab costs for supervising the project which comes out to 6,700 (the project total came out at 67K).

I'm debating if I should either get another contractor, negotiate the current bid with the contractor or doing the project myself. He's currently charging me 4 per sq ft to install new carpet (including materials) and 4.50/sq ft for laminite. He's estimating the cost of the roof at 10,200 which I think is excessive (I was expecting somewhere between 5-6K since it's a 1,500 SQ FT SFH).

The other concern I have is the basement getting flooded because the sump pump wasn't working. A plumber replaced the sump pump yesterday and charged me 395.00. It's expected to rain today or tomorrow and hopefully the sump pump solves this issue. 

As I walked into my first rehab... I uttered "No guts, no glory" under my breath as I thought to myself.. "what the hell have you gotten yourself into now"... you will learn more in the next 3 months than you could EVER read or learn in a class. Regardless of what happens, you MUST do the next project. Go easy on yourself- you may trip over a dime to try to save a penny, you may overpay for a part of the project... but you are learning. I sold my first place after 4 buyers fell through and walked away with $10k profit. You will do great- the house looks like it has good bones. Keep us posted! 

@Pam Pitts Thanks for your kind words! I'm definitely feeling a lot better about this project. 

Quick update everyone, this week we finished the Demo, roof, and landscaping and some exterior painting. I outsourced the roof and landscaping because my contractor bid a little bit too high on these items and I managed to save over 2.5K in those two areas. 

We are behind schedule already. I didn't plan ahead and so far it hasn't been too easy to deal with my contractor.  We signed all contracts last Friday but he only worked about 4 days on the project since then. Even though we have a payment schedule in place, he's putting a lot pressure and he's demanding more money. I've wrote him a check for 6,000 so far which in my opinion is more than enough for the demo and exterior painting. I told him I wouldn't cut him another check until I see more work done. 

He will be painting all the siding (he only did gutters) on Monday as well as some minor electrical/plumbing. I'm hoping to have this rehab done within the next 5 weeks. 

Here is a list of my mistakes so far, hopefully newbies like me can learn from this:

1. Not having a contractor in place/contracts signed. I met 3-4 different contractors while the house was under contract. After screening them, I only felt two of them were competent/experienced enough to handle the job. Looking back, I think I should have already known 3-4 contractors BEFORE getting the property under contract. I also signed all the paper work after I had closed on the property. It took me a while to decide what I wanted to include on the contract and learn how I could protect myself from any potential legal issues in the future. If I would have had the contract signed with a starting date (potentially right after closing), this would had saved me time and money. 

2. Hiring subs after the property closed. As I mentioned above, I decided to hire my own subs for the roof and landscaping. Although I save money, I spent too much time shopping for roofers and it took them forever to get back to me with estimates. In the long run it paid off as I saved nearly 2.5K on the roof. This really didn't have much impact on the project timeline but my contractor used it as an excuse to miss work for 2 days as he said the dumpster from the roofer would be on his way. 

@Bryan Schultz

This week we painted the exterior of the house (siding, gutters and fascia). Demo, framing and some drywall work has been completed. Some electrical/plumbing work was done as well. 

Lower level:


Lower level

It was pretty much done within budget. Minor plumbing issues but nothing crazy. The property most likely wasn't winterized correctly or was winterized too late. We had a few leaks on the basement of the house but we were still under budget because we had a plumbing allowance.

We are pretty much done with the rehab but my contractor will do some final touch ups tomorrow. 

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