First Dallas Flip! Deal or No Deal?

[Nicole Johnson]

Hello Everyone! I am under contract on my first flip in Dallas. I would love some advice and input. It is a hard money foreclosure already gutted with Demo, Framing, Mechanical, Electrical and Plumbing done. The home also comes with brand new windows and sliding glass door.

Address: 305 High Brook Drive Richardson, TX 75080

MLS info : 3/2.5 2,330 square feet w/ pool

Currently: 4/2.5 2,500 square feet w/ pool

Rehab: LVP flooring, quartz counters, ect.

Purchase Price: $450k

100% HML @ 11% $25k closing out of pocket

Rehab Budget: $70k-$80k maybe

ARV: $730k+++ (
-2 most recent comps sold at 288/ sq ft (no pool)

-1 active comp $338

-1 pending comp @ $340 sq ft

Questions:

1) ARV Opinion? Good or Bad Deal? (2 most recent comps sold at 288/ sq ft)

2) Rehab Budget Opinion?

3) Investor Friendly Contractor Recommendations?

4) I see about 20k delinquent taxes. Is that the seller's responsibility?

5) Typically, will the seller (hard money lender that foreclosed) allow me to have GC's walk thru for quotes prior to our closing in 2 weeks?

Thank you so much for any input!

[Nicole Johnson]

@Lucia Rushton this is great advice. I am getting itemized quotes this week. thank you!

[Bob Stevens]

Quote from @Nicole Johnson:

@Bob Stevens @Victor S. it was definitely just a ballpark. I am getting 3-5 itemized quotes on Thursday. We have walkthru's scheduled. I set aside 6 months reserves for the payment. Im going to go double check the budget again to try to account for more. Thanks for your input!

 PLEASE connect with someone local and flip the contract. IF there is really going to be a nice spread they, will you a large fee. Learn from that person start to finish, then go on your own. You should not need a GC to tell you what it will cost, this is something you need to know, and you will eventually. I do not want to see you get hurt, you are counting on GC'S that you do not know, and it seems you are not aware of what it really should cost for reno., This is exactly how I started, well 500 deals later :)

All the best 

[Victor S.]

there is probably 100k pre-tax here if everything goes smoothly. it sounds like you have a good grip on what you're doing. pretty large rehab for a first-timer, but gotta start somewhere, right. nail that rehab budget down and go from there. you will, most likely, still have to baby-sit the GC, so make it a priority to follow the SoW completion on the daily. Like Bob above said, you will need to learn and ballpark stuff yourself eventually.

Good luck and keep us posted!

[Michael W. McCord]

I grew up in that neighborhood and have a house there and I can tell you it's hard to get anything in that area even in this market so I say go for it. That 1 story ranch house type is very typical for the neighborhood and renovated comps are all north of 300 sq/ ft. 2-story houses tend to sell for a bit less. Ditto on the advice given regarding any prior liens on the previous rehab.

[Marc Stevenson]

Quote from @Nicole Johnson:

Hello Everyone! I am under contract on my first flip in Dallas. I would love some advice and input. It is a hard money foreclosure already gutted with Demo, Framing, Mechanical, Electrical and Plumbing done. The home also comes with brand new windows and sliding glass door.

Address: 305 High Brook Drive Richardson, TX 75080

MLS info : 3/2.5 2,330 square feet w/ pool

Currently: 4/2.5 2,500 square feet w/ pool

Rehab: LVP flooring, quartz counters, ect.

Purchase Price: $450k

100% HML @ 11% $25k closing out of pocket

Rehab Budget: $70k-$80k maybe

ARV: $730k+++ (
-2 most recent comps sold at 288/ sq ft (no pool)

-1 active comp $338

-1 pending comp @ $340 sq ft

Questions:

1) ARV Opinion? Good or Bad Deal? (2 most recent comps sold at 288/ sq ft)

2) Rehab Budget Opinion?

3) Investor Friendly Contractor Recommendations?

4) I see about 20k delinquent taxes. Is that the seller's responsibility?

5) Typically, will the seller (hard money lender that foreclosed) allow me to have GC's walk thru for quotes prior to our closing in 2 weeks?

Thank you so much for any input!

 @Nicole Johnson Hi Nicole, first off congrats on securing your first deal. You've had some great comments here so far. I'm mostly a buy and hold investor (of course occasionally a flip presents itself and makes sense). Just be aware that if you are needing to refinance this loan that a lot of the hard money lenders are adjusting the ARV number they are lending on. Depending on how long you're planning to hold the property this could impact things. Great Job! Happy investing!

[Nicole Johnson]

Thank you everyone for your input! I needed the doubt to encourage me to dig deeper, which gave me more confidence to stick to my numbers!!!! Appraisal came back today at $731k ARV! Yay! So far the best quote for Labor and Material has been $70K (I would pick material and his number looked spot on to what I have budgeted on a previous deal). This was a GC referral from another investor. Not sure if I'm going to go with him. I'm excited and still nervous! Thanks again! I appreciate each and everyone on of you taking time out of your day to give me advice!

[Victor S.]

good job. keep us updated.

[Carlton B.]

It looks like you got a great deal. I have done a half dozen flips in the past year and half. They were all good deals and most made money. The ones that broke even or lost was due to me not keeping the work on schedule or running out of funds. Do everything possible to keep the job moving and on budget all the way to completion. My two cents

[Nicole Johnson]

Quote from @Michael W. McCord:

I grew up in that neighborhood and have a house there and I can tell you it's hard to get anything in that area even in this market so I say go for it. That 1 story ranch house type is very typical for the neighborhood and renovated comps are all north of 300 sq/ ft. 2-story houses tend to sell for a bit less. Ditto on the advice given regarding any prior liens on the previous rehab.

 Hi Michael, 

Thank you so much for the advice and encouragement! We went live this past Friday with multiple offers! Please keep me in mind if you come across any deals for flips or rentals!

[Nicole Johnson]

Quote from @Mohammed Rahman:

Hey @Nicole Johnson - congrats on your first flip and for chugging along. Yes the market is shifting, and has been for several months, but deals are still being done. 

Most comments on the forums are cautiously optimistic but don't let it deter you! 

 Thank you so much for the positive encouragement!

[Nicole Johnson]

Quote from @Carlton B.:

It looks like you got a great deal. I have done a half dozen flips in the past year and half. They were all good deals and most made money. The ones that broke even or lost was due to me not keeping the work on schedule or running out of funds. Do everything possible to keep the job moving and on budget all the way to completion. My two cents

 Hi Carlton, 

Thank you so much! Im from Milwaukee! I went live 2 days ago and hoping to make 100k profit. We already have a couple offers. One over asking. 

[Nicole Johnson]

Quote from @Marc Stevenson:

Quote from @Nicole Johnson:

Hello Everyone! I am under contract on my first flip in Dallas. I would love some advice and input. It is a hard money foreclosure already gutted with Demo, Framing, Mechanical, Electrical and Plumbing done. The home also comes with brand new windows and sliding glass door.

Address: 305 High Brook Drive Richardson, TX 75080

MLS info : 3/2.5 2,330 square feet w/ pool

Currently: 4/2.5 2,500 square feet w/ pool

Rehab: LVP flooring, quartz counters, ect.

Purchase Price: $450k

100% HML @ 11% $25k closing out of pocket

Rehab Budget: $70k-$80k maybe

ARV: $730k+++ (
-2 most recent comps sold at 288/ sq ft (no pool)

-1 active comp $338

-1 pending comp @ $340 sq ft

Questions:

1) ARV Opinion? Good or Bad Deal? (2 most recent comps sold at 288/ sq ft)

2) Rehab Budget Opinion?

3) Investor Friendly Contractor Recommendations?

4) I see about 20k delinquent taxes. Is that the seller's responsibility?

5) Typically, will the seller (hard money lender that foreclosed) allow me to have GC's walk thru for quotes prior to our closing in 2 weeks?

Thank you so much for any input!

 @Nicole Johnson Hi Nicole, first off congrats on securing your first deal. You've had some great comments here so far. I'm mostly a buy and hold investor (of course occasionally a flip presents itself and makes sense). Just be aware that if you are needing to refinance this loan that a lot of the hard money lenders are adjusting the ARV number they are lending on. Depending on how long you're planning to hold the property this could impact things. Great Job! Happy investing!

 Hi Marc, 

Thank you so much for your advice. I just went live 2 days ago with multiple offers! One very strong offer over asking and a cash buyer very close. I actually listed for $750k instead of $730k. I was wayyyyyy over budget and had to GC the entire project myself. Please keep me in mind if any good buy and hold or flip properties come across your desk. Thank you!

[Ronald Fontenot Jr]

***EDIT*** I just realized this was an older post. Congrats on your deal! I'm anxious to know where you landed on your rehab. 

Please, please, please...get solid estimates for the rehab with bona-fide contractors. On a 2500 sf house that needs everything from the insulation forward, the budgets you've been quoted are very low. I'm a contractor/homebuilder in the Houston area and I can tell you with confidence that those numbers are off unless they are using the cheapest materials and labor they can find. Even then, still low. I'll throw this to you...a quick and dirty little estimate, numbers are labor+material based on what I've spent recently...

Insulation - $6k
Drywall - $10k
Interior doors/trim/shelving - $8k
Interior paint - $8k
Flooring - $12k
Cabinets - $15k
Countertops - $6k
Electrical fixtures - $2k
Plumbing fixtures - $2k
Shower/kitchen tile - $8k
Hardware - $2k
Glass (shower doors) - $4k
Disposal/trash - $3k
Rough/Final cleans - $1k
Appliances - $3k
Misc/unforeseen - $5k
Total - $95k and he hasn't made a profit yet.

It adds up quickly!!! If you want to get your price, you need good materials, good labor, and a contractor that will make a profit. Do a LOT more homework here, please! It seems you'll do ok on the deal, just don't get hung out there by the contractor who runs out of money. I wish you all the luck and hope you succeed!!!

[Michael W. McCord]

Saw your listing in my Zillow feed! Looks stunning and not surprised you got offers over asking, Canyon Creek is always a safe bet.