Where do I go from here? Here's how I made $85 K....now what?

36 Replies

Hello folks!

I'm new to this forum, and eager to gain more knowledge, as I'm on the cusp of making bigger investments. However, I'm lacking a plan to move forward. 

I want to share my story and get some feedback. I live in Ft. Collins, Colorado currently.

My story: Graduated college, learned multiple trades (tile, stone, trim carpentry), worked as a contractor, remained poor, changed course, college again, and went into Healthcare, built a nest egg. I always wanted to fix up a house and sell. 

Feb 2013: Bought a house in Orlando, Fl (College park) $112K cash. Built 1939 2 bed , 1 bath, 900 sf. Moved there from Colorado, temporarily. The House was pretty beat, termite damage, etc. 

This was a conventional sale, used a realtor to buy, didn't understand foreclosures or short sales or auction process.  And I still don't understand any of that honestly.

I knew the comps, and knew the market was close to its nadir, so I honestly knew it was the right call. Still scary though, I'd never bought a house! It was the classic cheapest house in the most expensive neighborhood. 

This was the kitchen during demo. 

I won't go through the entire process, but my remodel did not add square footage, as I'm not comfortable doing that by myself. 

 I did do a complete kitchen, bath and front porch tearout. Did some plumbing and added a couple circuits, nothing major electrically.  

With a few minor exceptions (landscaping), I did every bit of the work myself. I even had to buy new tools, as my set up was still in Colorado!

This was not really a "flip". I bought the house for my wife to live in as she did clinicals in Florida for 2 years. I knew I would sell it, so I decided to make it my project. 

I Invested about $15 K and about 5 months time into this project. 

We did live through the remodel, which definitely poses a challenge for most people. To make matters even more difficult, I was living in Colorado while my wife lived in the house. I was commuting once a month to Florida from Colorado. Damn, that sucked!

As we got close to selling time, I did my best to research comps. I put together a comprehensive spreadsheet. I wanted to squeeze out as much value from the house as possible. 

Because of this I decided to sell the house without a realtor. Many people told me this was a terrible idea. When I did the numbers, I decided I had to try to sell without a realtor, I felt the entire process was a total racket. But I also knew FSBO without an MLS was a waste of time.

So I simply bought an MLS number for $300 (still a rip off), staged the house, took the pics, marketed and did the showings. Here's how it looked at selling time:

Poured and polished concrete counter tops with recycled glass aggregate from beers I drank! Everyone told me granite was the only way. Whatever (so cliche). Less than 1/4 of the cost, but labor intensive and you'd better know what you're doing.

Obviously, I could go into more detail about the remodel work I did, as this required a lot of forethought as well. But I'm more interested in what people think I should do going forward.

In the end, the house sold for $212K. This was over asking price. I had two offers in 48 hrs. I did the showings myself and was as honest as possible to any potential buyers about the quirks of a house built in 1939. I used the same titling company I had used to purchase the house at closing (saved me $). Inspection went well.

To be sure, nobody knew this house better than me, definitely not a realtor. 

In the end, I profited $85k. I will not be hit with capital gains, as my wife lived in it for 2 years.

Lessons learned:

Timing is everything. The current market is not conducive to profits such as this. (And this is why I don't know how to move forward). 

Make it your Job. I have to devote myself fully to a project or it won't get done. Not just swinging the hammer..this includes marketing and research.

Research comps. Easily done via Redfin or other websites. 

Selling without a realtor is possible and potentially easy. Yes, I sold in a good market, making things much easier. That being said, if you know the process, do your research and be honest and friendly, it's worth a shot in any market. I'm kinda surprised the profession is not yet obsolete.

Questions for the pros out there:  

How do I reinvest? I am now in a new area (Ft. Collins, CO) and the market is obviously super expensive. A conventional purchase is out of the question. I feel the market is now absurdly over speculated. I cannot find any value here!

Foreclosures are rare and confusing. I've been to the county auction, but I do not feel comfortable bidding a house when I can't inspect to know the condition. Additionally, it's all cash! I have a lot , but not close to enough. 

The only way forward as I see it is to find a house before it goes to auction, and this process is again confusing. Any advice?

My goal is to find a rental here (college town, built in supply), but it is very discouraging. I'm more than happy to make this my job again, but in this market, my profit would be zero. 

Ok experts, let me have it. And thanks in advance!

@Devan Johnson that is awesome!

Many people don't have 5 months full time, long time for money to be tied up, 

opportunity cost

Do you have kids?

but good on the capital gains.

Selling at over asking is AWESOME! You priced it right!

@Dev Horn  

@J Scott

might want to comment.

Originally posted by :

@J Scott

might want to comment.

He got my vote...  House looked great!

I'm normally not a fan of doing work yourself (and would anyone who does this as a business to avoid it), but there are situation where it works -- when the profit isn't the most important aspect of the purchase, when you're handy, when you're planning to live in the house anyway and when you're in no rush are all good reasons...

Personally, I think my wife and I would kill each other if we tried something like that, so I respect the fact that not only did he get it done, but he's still married!  :-)

@Devan Johnson The market is tight but there are still deals out there. If you are prepared to make investing a full time adventure then it includes knocking on doors, direct mail, negotiating deals. The deals are not easy to find but when you have the time and ability to search full time, you will find deals.

Good Luck!

Nice job!  My advice to you is put down the hammer.  I was doing 1-2 deals a year until this year.  Now that I'm not doing the work myself, I'm starting on number six next week.  I enjoy doing the work but when I am the limiting factor because of trying to do everything myself it becomes a full time hobby instead of a business.

Hey Devan! Great project. I lived in College Park on Harvard Street for many years. That is a great neighborhood and your finished product is beautiful. I like that you didn't change the exterior look of the home too much, like so many do when going into the older areas, keeping its cottagey classic style!!! :)

I would get yourself some education on alternative methods of finding deals, it's fun and from what you mentioned it appears you like rolling your sleeves up, researching, etc. I have recently gotten very into the County auctions and there is a lot of information on the process online, since everything has to be public. If you know your areas very well that you are farming, get signed up with the County and start looking at who's buying, where are they buying, maybe team up with someone with a great deal of expertise in your area and learn how they are snatching up the deals. I am in a smaller market, but there are only about 5 main players (one very dominant) in our County auctions....you'll get to know your competition right away. I joke that I am waiting on him to go on vacation so I can get the deal that he missed :) When you are comfortable with your area as well and get some more deals under your belt, you may be more confident to go after those non-conventional deals.

It can be overwhelming the options of ways you can make these deals happen, choose one at a time and research it until know it front to back, once done, move onto the next. Get comfortable with these ideas and processes, then practice! You obviously have the talent, now go out and learn about some funky ways to make the next deal happen!

Originally posted by @Travis Sperr :

@Devan Johnson The market is tight but there are still deals out there. If you are prepared to make investing a full time adventure then it includes knocking on doors, direct mail, negotiating deals. The deals are not easy to find but when you have the time and ability to search full time, you will find deals.

Good Luck!

Thanks for the reply. Re: knocking on doors...I assume this to mean you identify a property that is in pre foreclosure and knock on the door, cold call, etc. Then see if a deal can be reached prior to foreclosure? 

Time and perseverance are not issues, it's actually finding a template to work off of. 

Originally posted by @Brian Gibbons :

@Devan Johnson that is awesome!

Many people don't have 5 months full time, long time for money to be tied up, 

opportunity cost

Do you have kids?

but good on the capital gains.

Selling at over asking is AWESOME! You priced it right!

@Dev Horn  

@J Scott

might want to comment.

 Thanks Brian. No kids...yet.  I've chosen a job that allows for 5 months off if necessary so that part was by design. Low expenses allow for this as well.  And the money was tied up 2 years, not just 5 months!  

Originally posted by @Erica Osborn :

Hey Devan! Great project. I lived in College Park on Harvard Street for many years. That is a great neighborhood and your finished product is beautiful. I like that you didn't change the exterior look of the home too much, like so many do when going into the older areas, keeping its cottagey classic style!!! :)

I would get yourself some education on alternative methods of finding deals, it's fun and from what you mentioned it appears you like rolling your sleeves up, researching, etc. I have recently gotten very into the County auctions and there is a lot of information on the process online, since everything has to be public. If you know your areas very well that you are farming, get signed up with the County and start looking at who's buying, where are they buying, maybe team up with someone with a great deal of expertise in your area and learn how they are snatching up the deals. I am in a smaller market, but there are only about 5 main players (one very dominant) in our County auctions....you'll get to know your competition right away. I joke that I am waiting on him to go on vacation so I can get the deal that he missed :) When you are comfortable with your area as well and get some more deals under your belt, you may be more confident to go after those non-conventional deals.

It can be overwhelming the options of ways you can make these deals happen, choose one at a time and research it until know it front to back, once done, move onto the next. Get comfortable with these ideas and processes, then practice! You obviously have the talent, now go out and learn about some funky ways to make the next deal happen!

 Thanks for the advice, Erica! The house is on Princeton, BTW :)

I actually have tried twice to approach others at the two auctions I was at. Both times were awkward for sure. I didn't get the vibe that people were interesting in sharing trade secrets, especially to someone that was so green. 

I'll continue to persist. My salesman mentality needs some work. 

Hey @Devan Johnson , firstly, that's awesome!

You did a fantastic job on that remodel.  I own a couple properties in College Park, and love that area.

I definitely concur with @J Scott about not doing your own work, but it obviously worked for you in this case.  The advantage you have first hand knowledge of how long things should take, what materials cost and how things should be done.  If you are interested in scaling, this will make you an excellent project manager.

Because of your experience, I would strongly suggest seeking out an experienced investor partner in the area who has access to deals and capital, but may not have the time or desire to be involved in the day to day project managing of multiple flips.  Basically what @Erica Osborn suggested:)

@Devan Johnson Doesn't need to be a pre-foreclosure necessarily, that is the great part about his business - everything is for sale. Could be a rental property owner, probate, ugly house, empty house or just something you are interested in buying. While everyone is mailing and you are knocking results will be in your favor.

Nice job. 

Bigger question: is this what you enjoy doing? 

More questions: Do you really want to do this yourself? Is it scalable? What part do you enjoy most? Finding deals? Negotiating? Planning rehab or value add? Supervising subcontractors (yuck)? Marketing (both acquisition and/or re-sale aspects)?

What energizes you most?

I could go on however I'm typically a bit burned out after a heavy rehab project is completed and sold. 

So, if this is what you do, what part do you think you make the most money doing?

@Devan Johnson you did an amazing job, but not only that, you really enjoyed it! Congratulations!  Love how you used concrete countertops, a lot of people still scare of them, don't know why. Wish you the best of lucks! By the way, I live in Sanford, and not sure why but the market is very active, every time I am studying a possible opportunity BAM...it goes into contract. Good Luck!

Originally posted by @JD Martin :

Nice job, I am really impressed! I also do all of my own work but I have never attempted concrete counters - I'd love to get some pointers, especially how you incorporated your own beer bottle glass into the counters!

 A lot of information online obviously, but here's a good overview:

http://www.concretenetwork.com/outdoor-kitchens/gl...

http://www.howtomakeconcretecountertops.com/

Like I stated in the post, I feel granite is becoming totally cliche. People are looking fof something similar yet unique. I've been doing them for years in both cheap rentals and multi million dollar show homes.

Here's my kitchen remodel, briefly shows my concrete counters being made:

https://youtu.be/KPCNTYohMIc

In terms of the people telling you to put down the hammer I both agree and disagree. You clearly have some serious skills that have a lot of value. I would focus on determining which skills are giving you the most bang for your buck and focus your time on those, and then look to outsource the time intensive, low return on skilled labor jobs.

For example, you might be getting a tremendous ROI on the time you spent doing those cabinets as the labor cost for having someone else do it would have a high hourly rate, so keep doing that. The ROI on your time for doing drywall / plaster repair might not be nearly as high so you'd be better of outsourcing that.

Focus on your high return areas so you can increase the number of projects you work on, without your own time becoming the limiting factor.

@Devan Johnson,

like others said, you have some mad skills (and a pretty good helper at cleaning up a rag(end of first video)woof).

maybe if your medical life live you some extra time, get into the finishes business (no drywall for you), only countertops, cabinets,... helping/for a local builder/developer. this may increase your chances of finding the off-market deal/fixer-upper in your market.

also since both of you are in medical field and no kids yet, you can pretty much move everywhere chasing the next construction/remodeling boom.

Thanks again for all the great respnses. to reply to a few statements regarding " putting down the hammer", I completely and respectfully disagree. As a former contractor, picking up the hammer us where I made my money. For example, I made $85K on this project, had I subbed this work out, my profits would be half or less.

My value is in my skills. New investors such as myself simply do not have the connections that established REIs do, it's that simple. So starting out, playing it conservative, controling and doing all the work myself is abosolutely imperitive.

And yes, I'm totally burned out after a job of scale, but I love the process, so I'll do it again, if possible. 

And in this market, I have to be even more conservative. No need to lament on the lack of deals out there, but more importantly for a newbie such as myself, there's a lack of opportunity. Contatcing any property owner pre MLS (pre forclosure) is not a unique aprroach. The few folks I've contacted have indicated that they have dozens of investors lined up if they wanted to sell.

I love DIY success stories!  Well done @Devan Johnson . Love the tax-free angle as well. Continue doing what you love to do. Is my highest ROI mowing lawns, installing fixtures or clearing drains? Hardly, but I like it and (with skilled work needed) by the time I factor in scheduling with the sub who schedules with the tenant who needs me to come check the work, etc etc I would've been done and home taking a nap already.

If you love construction, you need some fix-up projects.  To avoid the "what to do now" factor, I do buy and holds.  Fix 'em and rent 'em.  Maybe some local wholesalers or legit buyer's agents will send some opportunities your way.  Maybe put an ad on craigslist?  "Fixer wanted!"  Just don't overpay, of course.  Good luck!