I'm working on my first flip and wanted to document the process from start to finish. I'm hoping that sharing my experience will provide new flippers with my perspective on the project and that I can benefit by hearing from experienced flippers on my approach, decisions, assumptions and overall plan. First a bit of context on myself and the deal...
Up to this point I've been a buy and hold investor. A couple of months ago I had one SFH and one duplex in my portfolio and was searching for another SFH to add. I happened to find two properties which fit my profile and made offers on both. Both had previously fallen out of contract due to meaningful foundation issues, so I had a high degree of confidence that I could negotiate pricing down based on estimates from contractors. After a few weeks of intensive inspections, we successfully closed on both houses. Great start! Now the real work begins.
This property is a 100 year old 766sf 1/1 in a fantastic neighborhood in Stockton, CA. All the houses in the area are around the same age and have lots of charm and unique characteristics. I purchased the property for $123k ($160/sf). The opportunity with this property is that it has 425sf of un-permitted attic addition. I am estimating ARV at $200/sf (comps back this up).
I have a $45k rehab budget. The plan is to install a 2nd bathroom upstairs, permit the entire addition, cosmetically upgrade the entire house**, and come out on the other side with a brand new 1,191sf 2/2 in a great neighborhood. The house sits on a small but charming lot, so it won't be great for a family with multiple children, but would be suitable for an older couple or younger couple who work at nearby University of the Pacific. Plenty of those buyers in this market.
My partner and agent will be managing the rehab and will take a percentage of the profits. She's awesome at this kind of work and loves doing it. This will allow me to stay out of the weeds and focus on renovating and renting the other property I just closed on.
Purchase price: $123k
Rehab budget: $45k
ARV: $225k (conservative)
Gross profit: $57k
The architect is currently drawing plans which will be submitted to the city for approval next week. We have bids for the foundation work ($15k) and the new upstairs bathroom ($6k). Windows were measured and demo started this week. I'll plan to post every week or so with a progress report and any new material information. Hope this is interesting and helpful for some!
**I'm talking brand new house: new windows, texture, paint, brand new kitchen, downstairs bathroom, flooring, etc. Remember - this house has significant foundation problems (no one is playing marbles there) so those costs will have to be included in my rehab budget.
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Your repair budget seems low.
Welcome to BP @Matt Shamus and best of luck on your flip projec.