Flipped 5 houses in 8 months - but lost money on 2

43 Replies

I haven't posted in a while, so thought I'd share what we've been up to. We've flipped properties 3 through 7 since February and are in the process of buying two more to fix up. What value can I give to anyone that is reading this? Probably the most valuable lessons have been the ones that taught us we weren't invincible. We lost money on flips #4 & 5 and I have nobody to blame but myself. Here's a few things that went wrong with them: Flip # 4 was in Layton, Utah and everything seemed to be going good from the beginning. It was your pretty standard flip, but there were 4 things that we made mistakes on that ended up costing us: (a) Comps didn't support our ARV (1 comp did, but that was it), (b) contractor forgot to leave room for a fridge on the one wall – yikes, (3) garage door was too short to fit anything inside besides a car (Sorry, no Soccer Mom's) and (4) we didn't fix the terrible popcorn ceilings in front room and it was a huge eyesore as soon as you walked in. We ended up losing $3k on this house.

On to flip # 5: Flip 5 was in Ogden and we bought this one from a wholesaler. Where we got hurt on this one: (a) didn’t manage my contractor well enough – he worked pretty slowly and it took probably 3-4 weeks longer than it needed to, (b) did not get my initial budget correct – concrete work and unfinished basements did me in, and (c) it’s harder for my wife and I to flip further away (30 mins from our house). We lost $4k on this house.

Luckily, flips #6 and #7 got us back on track and we should get to the 6-figure mark for 2017. My 2018 goals are to flip 9 properties, wholesale 6, and buy 1 rental property. Take a look at some of the before and after pics.

Thank you for sharing. I love hearing the successes of other investors out there. I'm preparing to buy my first investment property, and I'm also interested in doing flips. I like hearing about the successes and some of the setbacks that were overcome to make real estate investing worthwhile. I hope to learn from your advice. Good luck with your future flips.

It sounds like you learned some valuable lessons, thanks for sharing with the rest of us. It's very helpful to know these details. Congrats on the other ones and good luck hitting your numbers for the year!

Do you have the numbers you can/want to post? I love seeing how they break down.

The good news is, even at a loss it sounds like it didn't deter you and you are moving forward and learning from the mistakes.

Really great to here about your success and your on the job education. I live in Lehi and flipped some properties back in 2011 I have very similar goals to you. I have money and have done a lot of handy work in the past. I would love to talk to you sometime.

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Be very wary of the flipping market. There are signs, such as a large increase in TV flipping shows, indicating that the market is at or almost at it's peek as it was in the early 2000s.

Every wanna be is rushing into flipping based on watching TV shows that are 2-3 years behind the market in many cases.

The market is about to adjust and flippers will be the hardest hit.

Be carful to insure your numbers are correct and concentrate on quick short time frame flips.

@Caleb Rigby Thanks for sharing your story. 7 rehabs...that's a lot of work to only make $100K! Is that net?

@Adam M., totally agree. This is net. I was forecasting to hit $140-$150k for the year, but then these two projects killed that dream. This is our first year (and part-time), so I still consider it a successful year and we are continuing to learn a ton. 

@Thomas S. , appreciate the advice. That is why I want to add wholesaling to my bag of tools - less risk and much quicker turnarounds. 

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Thanks @Rhett Dean , hit me up (send me a message). Love to talk about this stuff. 

@Caleb Rigby Warren Buffet has 3 rules which all reiterate don't lose money, however, they weren't major losses. I've experienced the same but appreciated each lesson. You're doing great! Keep up the great work! 

$100k and it's only your 1st year?!?  GREAT WORK!  And I also agree that you did a beautiful job! 

I have a question about the slow contractor, though.  How do you know when they are working slowly (especially if you're new) and how do you speed them up without pissing them off? 

I'm not into flipping, but I want to be more open to BRRRR, but that entails being more comfortable with fixer uppers, which I'm not right now. I'm terrible at confrontation, which is why I have a PM. I'm entirely too nice to evict someone. lol But dealing with a contractor seems scary if you suspect (or know) they aren't doing a good or fast enough job. What fix do you recommend for this (besides getting good recommendations before you even start)?

And thanks for sharing your failures with us.  It helps us grow!

Originally posted by @Jody Schnurrenberger :

$100k and it's only your 1st year?!?  GREAT WORK!  And I also agree that you did a beautiful job! 

I have a question about the slow contractor, though.  How do you know when they are working slowly (especially if you're new) and how do you speed them up without pissing them off? 

I'm not into flipping, but I want to be more open to BRRRR, but that entails being more comfortable with fixer uppers, which I'm not right now. I'm terrible at confrontation, which is why I have a PM. I'm entirely too nice to evict someone. lol But dealing with a contractor seems scary if you suspect (or know) they aren't doing a good or fast enough job. What fix do you recommend for this (besides getting good recommendations before you even start)?

And thanks for sharing your failures with us.  It helps us grow!

 You may just be framing it in the wrong way.  Don't think of it as a confrontation, think of it as staying in communication.  If it is your first project, just make sure you are on site a lot (though not in the way if you are not doing the work) that way if no-one is there for a few days you know what is going on.  There will always be random days when things are not happening, but know what they are for and ask questions.  AKA "kitchen is almost done, just waiting on X inspection, or counters to be delievered before we can do Y"  

Just like dealing with a Property Manager or anyone else doing a task for you, find the balance between over communicating/annoyance and under communicating and being surprised when your project gets put on the back burner.

@Caleb Rigby Great work man! Very impressive, especially doing that part time, you are hustling!

Thanks, @Jarrod Kohl . That helps a lot--Especially that part where you said there WILL be random days when nothing is going on. I didn't realize that. I'm looking to do some work on my SFR before trying to sell it and am glad to know that part of the deal so I don't get mad needlessly.

I'm about to start in 2018.  I hope I can make $100k in my first year!

@Caleb Rigby Congratulations on the ones you guys did well and the ones that were not up to your expectations. Not every deal will close what you think it should on the deal. But, we persevere and move forward. This business is all about moving forward, not backward, thanks for sharing. 

One thing I always let people know is that deals on paper are worth nothing, you need to do a deal, experience it and then come out the other side to really know this business. Starting any deal, requires action. Again, thanks for sharing and best of luck on future deals. 

@Sam Marcos if making 100k is your goal, make sure you look at your goal first thing in the AM, at bed at night, put it in your wallet, everywhere you see as a reminder. You will get there! 

The thing about real estate investing is that it comes with risk. I remember hearing an interview with a professional poker player a while back and he said something like "how many normal people can come home after a 10 hour workday and say 'hey honey, so I lost $40,000 today.' That happens to me all the time." It's kind of the same in real estate.

The key is to see the long game and win more than you lose. To do that, you have to take the losses in stride, which it sounds like you've done. Best of luck going forward!

@Caleb Rigby Good work, two steps forward, one step back, but the trick is to keep learning.  Learning to really value properties supported by what the market is doing is a good lesson that can prepare you to anticipate possible down times.  

Thanks a lot for sharing ur story!!! Wow that’s some tough situations...glad the others made up for the loss! Beautiful pics!! Much success to u for 2018!! We will be closing on 2 rentals end of month and we have been working on one currently...the transformation is sooo exciting to see!! We are excited and ready to get the other 2 ready to rent by December...our goal is to have 10 paid for rentals by end of 2018! We are on our way!!

@Caleb Rigby Thanks for sharing your story. Many people avoid sharing that they lost money, which is unfortunate. The REI game is full of real ups & downs, & it’s great that you’re willing to share your own pearls of wisdom you’re gaining on your journey. The pictures look great.

If you’re ever needing another contractor in your pocket, I do renovations all over & have flipped homes personally as well (although not in UT). I’m also curious as to how you have been finding your deals.

Again, thanks for your post & good luck in your upcoming projects.

How much were the properties you were purchasing? 

Consider it paying for education.  You survived and can keep from making those mistakes again. 

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