My First flip... High $$ in my home town. Follow along

79 Replies

Well, After almost a year of looking, getting $ lined up, networking, reading BP and basically freaking out... My wife and I have taken the plunge, we sign tomorrow and close monday on a flip in my home town... 

I live in NorCal.. very $$$ area where people pay stupid prices seemingly way out of line with reality. It has taken me looking at probably a dozen MLS and pocket listings to find one that would pencil. Basically everything on BP turned out to be true. Dont force it. Find the right house, with the right seller, at the right spot... and GO.

This house was listed in July for $850,000.  Built in 1972 in good shape overall.  90's kitchen remodel, but otherwise original. Lots of pics and data there..

I went and looked at it when they dropped it to $650k, a 200k drop in 45 days... I was thinking wow, this house is gonna be TRASHED.. bad foundation, mold, termites, SOMETHING that is causing people to walk away.

Turns out no... nothing wrong with it.  Just a garbage realtor.  No staging, no paint, nothing but a little new sod was done to the house.  Still crap all over the yard, crap in the garage, crap in the driveway.  I offered on it at $620 just to get in under contract.  they countered 630, I countered 625.

2 weeks of inspections, and I knew that with holding costs...(likely have to wait until spring to sell it) and the rehab it would need, I couldnt pay $625 and be safe.  

I am borrowing 100% and the rehab between my heloc and conventional financing on the house.  I had my contractor write me up a $30k deferred maintenance bid, dripping P traps, the small amount of termites, all the usual dry rot for a 45 year old house etc.. and countered them down $50k to $575.  thinking they would come back at me and I would have a decision to make.  And to my shock... THEY TOOK IT.  

I have a contractor I am working with I need to tighten up his bid a bit... we will be at about $70k for full baths and kitchen and flooring and paint interior exterior... new lighting, hardware.... and one structural change to un ink the living room....  I will update this thread as I go!

Went and signed yesterday.  Lots of learning, lots of $$$!

Lots of talk with the closing about taxes, insurance, prepayments and impounds... Always some surprises.. always more money!  Conventional financing is cheaper, but they have some silly rules....

Funding and keys monday..!

Well, 10 days from closing, and my contractor just bailed on me.  Yahoo.  Now I have to find a new one, and hope that his numbers are close to the first guy.  First mistake of many on this road... was settling on a guy and not getting any other bids...  Now I dont have anyone else piped in.. AND I have no idea if the #'s from 1st guy will even closely translate to anyone else.  JOY

@Joseph M. It is liveable.... it needs a lot of work... not WORK...  90% cosmetic... it is just that it is original and dated, plus a lot of BAD homeowner work. EVERY ceiling in the house has this tragic sponged glop plaster effect.  12 different wall textures etc...  2000 sq. feet of that in a town with moderately high expectations leads to high bids.  

for $, I used my heloc for down, and will $ the rehab with it... then financed through a conventional non owner occupied for the rest.

I have had 2 other contractors through.  One is more than I want to spend... another is bidding it today after we walked it yesterday....

In the future I will get 3 contractor bids, as well as independent trade bids for each part...

Originally posted by @Michael Plante :

675k to make approx 100k

Is this a normal ratio?

 hmmm.  No.  THis one, IMHO has a pretty small margin.  But it has some factors that to me, for my first make it worthwhile.  Not complex as far as the rehab goes... close to home.  Desirable street.  I didnt want to try and manage my first one 30 miles away.

Well... It has been a LONG road finding, negotiating with, and signing a new contractor.  I ended up using the first name I heard at the very beginning, and wish I would have just called him first.

Demo has begun.  Wifey has been choosing finish items and colors...

Flooring is all out, kitchen is out

Hall Bath Demo.... Nice HUGE hole for the shower drain let rats in.

Flooring out in the lovely sunken living room that will soon be leveled up to the rest of the house.

On the marketing side of things, I have been getting LOTS of interest, every 3rd person I know is a realtor.... They all start drooling the minute I let them know about it.  We have a hot market, AND tight supply here.. so that is sweet.  I have been getting the"oh can I come look at it?" and the If I get you a buyer now can they pick stuff?  questions...

This all makes me feel pretty warm and fuzzy about the end game.

A good week for me and the flip.  Dear wife picked the tile for the two bathrooms.  Record time 

Coordinated some choices with my contractor on some things, made good choices.  Contractor found a leak in the washer  supply during demo... small thing... but first issue found in demo.

Living room floor is raised to the same height as the rest of house, and decked over and ready to floor... super stoked... All the cake frosting cielings are out, and skim coating is underway...  Wall mount toilets are out,  and new plumbing is installed... bathtub installed, new interior doors hung!

pictures onces my phone syncs...

The only other structural change we made was to open up the entry into the kitchen and family room, there was a terrible package of walls and corners that made it super tight to view into and enter the family area.  We took the wall on the right back a foot or so (load bearing after that) and the wall on the left back just 8" or so to match with the other side of the desk niche.  If I was going to live here I would have taken the LR/FR wall back like 6 feet... but too much $..

Really stoked with the progress.  Monday-Wednesday they painted the exterior.  Dear wife only changed her mind 34 times on color scheme.  In the end we decided to just change it a BIT, and make the body a bit less of a green... Did all the dryrot repairs as well.  Got lucky when they opened the porch roof that there was nothing we didnt know about for dry rot.

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