Just closed on my first Flip property yesterday afternoon and quite excited to get going. Previously i have only dealt with buy and holds. I decided to go the @Brandon Turner route and partner with an expert flipper for my first one. I have spent the last 4-5 months getting to know a guy who flips within a 4 square mile radius of Chicago (has done over 100 in the last few years) and has gotten to the point where he set his own comps at times. We are operating a 50/50 JV where i deal with all the financing, legal, accounting, insurance etc and he deals with the permits, construction, contractors, architects and so on.
I am using a HML which of course reduces the profits (i could make 20-30k more with cheaper money). But spending 45K (over 6 months) to make 60K (30K when profit is split) is still great for me and builds up my portfolio and experience.
The rehab cost is conservative because my partner has been able to complete other houses with 125K-130K so we padded 10K just in case. Also it is always a total gut rehab down to the studs (even studs get replaced so its almost impossible to be surprised by any extra repairs (only surprises would be tied to outside factors like theft and fire etc...). All the other costs (except cost to sell) are exact because i paid them all yesterday. Insurance is prepaid for a year so its part of closing costs.
I will put up some before pics later. As of now the architect has been there and has started drawing up the plans and layout.
I look forward to calling myself a flipper.
For all the newbies (im still one myself) you just have to jump in and do it. I decided to jump in this past February and i now own 5 buy/hold units, am a small investor in one flip, and now closed on my own flip with a partner. All while working full time (switched to a new job 2 months ago). I'm still very small potatoes and sometimes i feel like i haven't done anything but at least I have started down the path i want to go.
Currently a 3bd/2bath. Finished product will be 5 or 6bd /4bth total. We are essentially adding on a second floor (pop top) and there is enough footprint there for 3-4 bds with one of the beds being a master suite with its own bathroom. Basement will contain the other 2 bedrooms and 1 bath. First floor will be completely open with Living, dining, Family room and kitchen with two separate french door entrances to porch. Premium wainscoting all around the first floor.
Exterior - Top coming off
Dining room with mold
It is in the portage park/Dunning neighborhood. Near Irving park and Austin. Depending on who you ask its either portage or dunning so im not fully sure actually.
Awesome job. Your numbers look solid. Utilities seem too low (would be low for Texas, where the AC is usually running well into November), but that's not going to kill you.
It looks like you are budgeting 6 months from close to close? How long has it generally taken your partner to complete these full rehabs? We are working on our first one, pretty much a full gut and rehab, and it's taken us 7 months. Most of that is because of our experience level - just curious how fast an experienced rehabber can do it.
Congrats! I look forward to see the after pics.
CONGRATS....looking forward to see what you do with it. You bought it off the MLS?
@Bill Hinshaw On average he has been able to get done in 5-6 months (including sale). Some have gone longer but are usually due to issues beyond construction (title, financing etc). The time waster here in Chicago are the inspections and the city. Without that he can do the actual rehab in 2 months. Inspections can easily add a month. About half of his projects are presold prior to completion which helps. As to utilities, AC is not needed (chicago in November lol) and HVAC is not installed till later so gas wont be needed for a while. However even if i budget over 100 bucks a month im still good on profit.
@Edward Adekanbi Yeah off the MLS. Was an estate sold by a trust.
Congrats!! Looking forward to see the progress and the post-rehab pics. I live in Dunning and I think is a nice area.
if it would not be to much of a boredom; post pictures in various stages of the rehab so I can view your team work to determine if he is someone I would consider working with.
Enjoy as you prosper.....
congrats on taking action
Hopefully majority of the pop top could be completed before this upcoming winter
Congrats @Nnabuenyi Anigbogu !
I am glad my spreadsheet is useful for you :-)
Where did you get 100% rehab financing? Please PM it to me.
Thanks for sharing. Looking forward to seeing your finished product.
Looks good, you're doing all the right things
@Wendell De Guzman I have my own spreadsheet that i developed that i use to further break things down. However i realized that for ease of presentation and understanding yours works better when showing others the numbers. Thanks sharing it with me.
I will PM you the funding source.
Hopefully we can get a JV going in the near future. I would love to work with you.
Great article! Good area as well! We all want to see completion pics!
Sweet orange countertops in that kitchen @Nnabuenyi Anigbogu !
Seriously, the property has a lot of potential. You mentioned a possible second story. I can't see the neighboring houses. One thing to keep in mind is to not over-improve the property. If the whole neighborhood is single story 3/2, stay the course.
Good luck! Excited to see the end result. Keep us posted! And welcome to the wonderful world of flipping.
That is just awesome. You seem to have worked hard to come very far in a short period of time. Congrats to you.
Definitely going to follow this one. Looks awesome!
@Mindy Jensen That is the beauty of working with an experienced partner. He has sold over 100+ homes in that area so he knows exactly what improvements to make. There is a resurgence in the rehab of Chicago bungalows in the area and most people (even retail buyers) are adding or expanding the second floor of their homes. We are taking advantage of that trend and hope to capitalize on it.
We will actually be above the neighborhood in finish when done but not too far above the median price. That is the competitive advantage we are trying to use. And its bought cheap enough to allow for any variations that may occur.
I will provide updates as they occur.
So excited for you, @Nnabuenyi Anigbogu . That first flip is such a learning experience.
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