Flipping Diaries: Week 1

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Purpose of This Post: To continually update my grand re-entrance into house flipping. I will be making a lot of mistakes. I mean a ton. And I want to be able to learn from my mistakes by publicly sharing them and learning from the community and from the research I will do. My hope is to have a place where other new investors will be able to look back and see my path and follow the good while avoiding the bad. It will also help to keep me focused by writing down my goals and having people hold me accountable to them. I will be posting at least once a week to update what I did well, where I miss stepped, what my goals for the upcoming week are, and some general questions I am having about facets that I hope some readers will help me research and get some answers on. So without further delay:

WEEK 1

Where I Came From

Hello, my name is Ryan. I am new to bigger pockets and relatively new to flipping (I won't even call it real estate investing because I don't want to open that can of worms here). I flipped 6 homes from 2010 through the end of 2011. I loved it! At the time, I was working with my brother and we were making $30k - $60k on each flip! I didn't know it at the time but this was bad. Very bad. It meant we were young, making lots of money, and making lots of mistakes. We got some stupid idea that we should invest our money in a restaurant franchise. So we chose a franchise that we loved growing up in Southern California and attempted to bring it to North Texas.

Yeah, I know, dumb. If it’s not broken, why fix it? I don’t have any clue why we thought we should put ALL our investing money in this franchise and give up on the thing that was working well and giving us tons of cash. We had a great system set up with a killer real estate agent, awesome GC that never did us wrong, and we knew how to pick, design, and finish out a house in distress.

Six years later we have closed our restaurant, lost most of the capital we had accumulated and went our separate ways. My brother went back to a corporate job and I am trying to recreate the good thing I had back at the beginning of the decade.

Where I am Going

I have accumulated $200k of personal funds to set up my base capital. I am having to start over new with many of my contractors and other contacts because I have moved from Dallas to Fort Worth (about a 50-mile separation). I am being much more proactive in my independent learning and that is how I stumbled upon Bigger Pockets.

My goal is to flip between four to six properties and acquire one multi-family (two to four units ideally) each year. I would like to do this for the next five years. To accomplish this, I am going to work to develop a pipeline of leads from various sources, assemble of team of real estate professionals I can contact and contract with, and by continuing my education wherever and whenever possible.

My First Deal

I am using the term "deal" loosely. I acquired it from a less than reputable wholesale company in the state. Didn't know that at the time but have since learned by receiving other leads from them that were horrible and from reading about them on BP. I got the property for about $15k too much. Quickly after getting the property, I learned that the foundation issue I thought was a quick fix was much more serious. This is the downside of the wholesale deals where you don't get an inspection time other than the hour during the showing before a bid collection. I was very unprepared for this and bid $6k over asking because I was too eager to get the property and there were five other bidders there. I also was too trusting that the wholesaler knew the market and would give an accurate ARV (after repair value). They overstated the ARV by about $15k.

Given all these mistakes, I feel lucky that it looks like I will still turn a profit on this house in addition to learning some very valuable lessons. Here are the numbers:

BYERS AVE

Purchase Price: $231,000

Purchase Closing Costs: $6,800

Renovation Budget: $39,000

Holding/Financing Budget: $13,000

Staging/Clean-up: $2,800

Commission/Closing: $15,000

Sale Price: $315,000

Total Profit: $7,400

I should end up holding this house for about 3 months (1 ½ months for rehab and 1 ½ months on the market before we close).

Moving on From Here

-On the Byers Ave house, I have the foundation and some trees that were causing the foundation issues taken care of. I have the GC starting work Monday in which we will be adding a utility room, a hallway to fix a pass-through bedroom and make it a true 3/2, gut the kitchen, and master bath, and basic cosmetics. They should be done by June 8th (4 weeks).

-I am actively seeking a second project. I have two wholesalers that I am using that are slightly more trustworthy. I have an agent that has set up an MLS push for homes in my zone that hit keywords I am looking for (this is amazing if you haven't set this up; just ask any agent to set this up and it will automatically update for you whenever something changes). I also went driving for dollars (drove neighborhoods I am interested in and collected addresses of houses in distress) and found 15 good possibilities. I am looking them up with our county appraisal district website and finding addresses to the owners. I want to drive and find 25 more before I send out letters.

-I need to finish setting up google voice so that I have a number to add into these letters that I can control.

Questions I am Working on

-How do you use google voice?

-What are you looking for when driving for dollars?

-Do you knock on doors when you see a house in distress but it looks like someone is home?

Best of luck to you!

Google Voice is really simple once it's set up. Once you pick your number you will need to check the app for texts/VMs. Any calls will come through like a regular call, you will have the option to accept or send it to VM once you answer it. I just used someone else's phone to call/text my own phone to see how it worked.

As far as knocking on doors, I personally do not do that. I would send a letter or make a call if i can find a number.