My First Flip. 8 months and Counting and Hopefully $150k Profit
This is the After:
This is when we bought it:
This is going to be an in depth write up of the work we completed on my first flip, located in a wealthy suburb of Detroit that will hopefully net us around $150k (eat that @Brandon Turner, I hear you talking bad about Detroit on the podcasts ;) ). The home was a 3 bed, 2.5 bath @ 1800 sf that was in desperate need of updating in a very hot market with a lot of surrounding tear down/new construction homes that were recently banned due to historic preservationists and the community. We closed at the end of February for $265k and originally only planned for listing the home for around $540k at max. We ended up adding a new master suite and increasing the square footage to 2,400 sf. As the project evolved and we ended up really being able to transform the house into something really great, we ended up listing this past Wednesday for $649,900.
Our original budgeting landed us somewhere around being all in around $410k, and I still haven't updated it but I'd assume we are now all in (including carrying and closing costs depending on how soon we sell) for somewhere around $450k. I don't like not being on top of my numbers but so many things have happened the past month that I haven't entered and updated my spreadsheet.
The project was completed by my father and I and the people we sub contracted. We have no experience in flipping previous to this but work on our own homes a lot. I just completed my first duplex in a neighboring city last year and refi'd it and got a HELOC to afford this project, and my father has lived in almost 10 homes over the last 30 years, fixing each one up nicely as we lived in it, or prior to moving in. I have a degree in architecture and we're both business savvy/entrepreneurial people; so we decided to tag team this one as a summer project.
The whole thing was definitely an experience; from completing my first set of residential building docs to managing subs, the permitting process, and going through the punch-list to get it ready for sale. We learned a lot, made some mistakes along the way but we got lucky and nothing was too costly.
As an Architect, I like to romanticize the project since this home is on the edge of downtown, at a main intersection which acts as a gateway for a lot of traffic to and from downtown from the neighboring township. We ended up taking a turd of a house and completely changing it and hopefully making it something worth looking at now. I've included an aerial map of the situation below for context.
The home is a 5 min walk from downtown which is great, but the corner we knew would always be the downfall of this project. After hosting our first open houses this weekend; that is definitely still the case. We had over 70 people come through over Saturday and Sunday and everyone said what a great job we did with the design and work, but the fact that it was on the side of a main road was one of the only downfalls. To try and mitigate this problem, we did install 1.5" of Poly Iso foam board on the exterior, and installed the Hardie board in a rain screen fashion for durability, but also to block the noise infiltration and help with the thermal bridging through the studs. I did have an energy audit performed and we did get the house down to 5.8 air changes per hour, down from over 12 in the beginning of the project. The new energy code in Michigan requires 4 or less for new builds, so being able to market a nearly comparable home despite it being built in the 1930's is definitely a plus for us, especially since we don't have the same $750k+ price tag.
I had to fight both contractors and my father to get the extra insulation up, as I'm sure I would have to do with 99% of the people here but energy efficiency and sustainability are very important and integral to the projects I want to complete, so I wasn't willing to let it go. We ended being really grateful that that was the case because everyone that came through the house mentioned how quiet it is, even with being next to the main road.
I've included our semi updated budget in case anyone wanted to see how I planned our expenses. Again, it's not updated with the last 3 or 4 weeks worth of expenses, which ended up being a lot; but I built in a contingency and that should cover a lot of what isn't included.
The as built documents are below, followed by the proposed and completed changes. Some things have changed but I'm not updating the plans after the permits were issued so please reference the photos below to see the final implementations.
Being a designer definitely allowed us flexibility in getting us the home we wanted, and the speed of me being able to update the drawings after my 9-5 everyday during the planning process. This was the first time I worked residential in my life, but I ended up REALLY enjoying it, and I look forward to being able to work on custom homes in the future, and spec'ing everything down to the doors, hardware, cabinets, finishes, and everything in between.
The before and afters should hopefully speak for themselves as to the work that we performed; but what you can't see in the pictures are brand new wiring for the whole house, a two-zone hvac system to enable comfortable climate control between the upstairs and downstairs, heated floors in the master suite. The full listing is live at Home Listing .
South elevation B/A
South/West elevation B/A
North/West elevation B/A
Garage facing home B/A
Kitchen B/A
2nd fl bath B/A. Sorry about them being rotated
Side entry/mudroom B/A
We ended up raising the floor in that vestibule area and moving the wall to the right over to the left to accommodate the refrigerator into the kitchen.
This was the new addition that went up for the master suite. All new 2x6 framing and lifted up 21", so now the kitchen below has ~10" ceilings and you walk up three steps into the master bedroom. We did dual barn doors to separate the bedroom from the closet on the right, and the master bath to the left.
Full height shower and toilet room to the left, 2nd fl laundry area to the right.
The old master bedroom (we still have to put up shoe molding on the entire 2nd fl)
We dug into this room to move a closet in order to accommodate the passageway for the master, so while not ideal, we didn't have a better option.
Bed 3
Main living room. We were fortunate that my mother owns a boutique store in town that sells home furnishings and furniture, and she's great at decorating so we got all this staged for the time of moving it and a kiss on the cheek. Thanks mom! She did an amazing job. She's moved even more over there since these photos were taken and the place looks phenomenal.
Dining room. We put in headers over both of the openings into this room, and removed a door that led to the adjacent mud room and it really made the flow of the lower level complete.
The new corner fireplace. We used the same tile as the backsplash to tie the room together a bit. I really think the placement of the fireplace on an angle helps to draw people in from the front living area back to the kitchen, which is the main room in any house and especially in this one with the giant island and tall ceilings.
Frigidaire Professional Series appliances, granite tops, and marble backsplash tile. The cabinets were RTA cabinets and we were really impressed.
As mentioned above; my dad and myself spent nearly 3 agonizing months every Saturday and Sunday ripping off one layer of aluminum siding, and then cedar lap siding to reveal the original sheathing of the home. We then covered it up with 1.5" poly iso R8.5 foam board, furred out all the penetrations with 2x4's, installed the new doors and windows, flashed them, and installed the Hardie in a rain screen format such as the picture below. It was a lot of extra work, added about $3k to the work, but my style of home renovation requires something extra for energy efficiency. It's yet to be determined if this is a positive selling point or not. I will update when we do end up selling if my thoughts have changed or not. The home's weakest areas (the original portion with 2x4 framing still) has R-13 plus an additional R-10 from the foam board and air space from the rain screen install, and R-32 in the kitchen and master suite areas. I would estimate this home is now 30-40% cheaper to operate than it's competition, and that is what I based my decision to go through all the extra work for. I would hope for a 4-5 year return on investment on the extra insulation, not to mention the benefits it allows for the Hardie board in being able to dry out the backside, unlike the traditional method of installation.
New and improved side yard/entry and landscaping.
Revamped back deck and yard design
Entry from back alley/garage
New garage doors
Main fl bath. We have since staged this and included a nice mirror but I don't have any pics.
The downstairs was disgusting before. The ceiling were a bright yellow and the walls were unpainted bead board. We painted the ceiling black, the walls white, and put down carpet.
All in all, I'd estimate I myself have over 900 hours into the project. So if I didn't have a full time job, this would be about 23 weeks worth of time. The past 7 months have been completely taxing on me, I've had maybe 6 weekends off in that time so I'm definitely ready for this home to sell and go on a LONG vacation but in the end; I learned more during that time than I could have ever hoped for while working for someone else; so I'm very happy we ended up choosing this home as our first flip project. Shout out to @Keith J for listing the home for us. I've known this guy since 2nd grade and would have never guessed we'd end up working together years later.
Last week I had an offer accepted on my next home, a 3 bed 2.5 bath house with 1,310 sf in an even hotter market that I intend to double the square footage by adding a 3rd floor and some other changes. I will take what I gained from this project and hopefully do an even better job on the next one. Wish me luck. Thank you all for reading, and I welcome any comments or questions you might have.