Just finished my first flip! $30k profit!

144 Replies

Hey everyone,

I just finished my first flip and profited over $30k! It feels good to know that I can be confident in my numbers and rehab estimates. I was only a couple grand off, which I feel pretty good about. Did most of the work myself, which helped my profit quite a bit. If you’re interested in the details, we documented the whole process on YouTube: https://youtu.be/dJ9KTHW78Hk

Anyone else pumped about a recent flip? I’d love to hear about it!

Congrats on your success, not bad at all. As a suggestion, take all your hours spent on performing the rehab tasks and calculate what your hourly rate was from your profits. It may be beneficial for you next time to hire out tasks that are “below your pay grade” so you can focus on the higher paid tasks like finding deals, raising money, building your team, adding systems for efficiencies, etc.

Congrats on your success. Also, way to take action and trust yourself with what you learned. Hope you also learned a lot by doing. Happy investing!

Originally posted by @Jashiel Munoz :

Congratulations on your first flip, I’m about to finish mine. What is your strategy to deal with the capital gains tax? 

Your income from a flip is NOT capital gains, it ordinary income and it is taxed at your marginal tax rate. Aside from having an S corp to flip from and having some income via payroll and a smaller portion as dividends (to reduce your self employment taxable income), there are no tax advantages or means to avoid tax legally on a flip. You should be speaking with your CPA on this topic as I am not a CPA and the info above is NOT tax or legal advise.

@Jamie McCauley

Awesome job, very nice! I'm currently in the middle of another BRRRR, but considering flipping it instead (it would be my first flip too).

Originally posted by @Will Barnard :

Congrats on your success, not bad at all. As a suggestion, take all your hours spent on performing the rehab tasks and calculate what your hourly rate was form your profits. It may be beneficial for you next time to hire out tasks that are “below your pay grade” so you can focus on the higher paid tasks like finding deals, raising money, building your team, adding systems for efficiencies, etc.

 Will, 

Thanks for the suggestion!  That was one of my "woes" from this last project, how long it took me.  I was planning on 2 months when it actually took about 3.5.  If I continue flipping, I will definitely work on assembling a team.  


Thanks Again!  Cheers

Originally posted by @Jashiel Munoz :

Congratulations on your first flip, I’m about to finish mine. What is your strategy to deal with the capital gains tax? 

Jashiel, 


Like will stated,  there is not much you can do with a short term flip to avoid capital gains.  The best way to "deal" with them is to pay them :) 

Originally posted by @John Fortes :

Congrats on your success. Also, way to take action and trust yourself with what you learned. Hope you also learned a lot by doing. Happy investing!

 Thanks John!

Definitely learned a LOT.  If I'm going to continue flipping, I need to make some changes to make it more sustainable.  


-Jamie

Originally posted by @CJ M. :

@Jamie McCauley

Awesome job, very nice! I'm currently in the middle of another BRRRR, but considering flipping it instead (it would be my first flip too).

Thanks!  I think changing your plan is ok, I've sold rentals before if they have appreciated a lot.  I think to myself..."how many years would I have to rent this to make x profit?"  Sometimes it's an easy choice :)

Originally posted by @Jamie McCauley :
Originally posted by @Will Barnard:

Congrats on your success, not bad at all. As a suggestion, take all your hours spent on performing the rehab tasks and calculate what your hourly rate was form your profits. It may be beneficial for you next time to hire out tasks that are “below your pay grade” so you can focus on the higher paid tasks like finding deals, raising money, building your team, adding systems for efficiencies, etc.

 Will, 

Thanks for the suggestion!  That was one of my "woes" from this last project, how long it took me.  I was planning on 2 months when it actually took about 3.5.  If I continue flipping, I will definitely work on assembling a team.  


Thanks Again!  Cheers

That is a very common and typical situation/mistake that we Investors all make when starting, trying to save every dime to make the most by doing things yourself. When you factor in the extra hold time for going slower and the fact you spent time doing physical labor rather than other more important aspects, you realize you made less going down that road.

That said, that very same real world lesson is crucial so I often invite new investors to try going the hire each sub version even though it is more time intensive and even doing things yourself as you learn how much it should cost to "swing the hammer" and how long it should take to do the same. Those life lessons in real estate really helped me with scaling my business.

Can you describe step by step how you found the deal, came up with the repair estimates, and the funding?

Congrats

Congrats on the success.  I do think it is a good idea for an investor to be deeply involved with their first flip.  Aside from the money "savings" you can get from doing the work yourself I think the learning that is gained over the project is way more valueable.  It really helps to know what things should cost, what materials cost, what is necessary vs what is an "upgrade", etc.  These types of things are hard to learn if you are less involved.  

Originally posted by @Anthony Dadlani :

@Jamie McCauley. Congratulations !  Wishing you many more. Flipping homes is a great strategy to creating income and long term wealth. 

Best of luck in all your endeavors.  

 Thanks Anthony!

Originally posted by @Michael Heisterkamp :

Congrats on the success.  I do think it is a good idea for an investor to be deeply involved with their first flip.  Aside from the money "savings" you can get from doing the work yourself I think the learning that is gained over the project is way more valueable.  It really helps to know what things should cost, what materials cost, what is necessary vs what is an "upgrade", etc.  These types of things are hard to learn if you are less involved.  

Good point Michael.  We learned as we went what materials/choices were necessary and what we could do to save money.  Now I just need to find a team of reputable people who charge a fair price for their work.  

 

Originally posted by @Derrick Burtle :

Can you describe step by step how you found the deal, came up with the repair estimates, and the funding?

Congrats

Sure Derrick!

We found the deal from a wholesaler in our area. Not just a wannabe wholesaler, but a legit one who has accurate ARV's(he was under by $1000 :)). I knew it was in a family-friendly middle-class neighborhood, so the resale would be easy.

For my repair estimates, I did estimates based off of previous renos i've done in the past on my own(personal) homes.  For example: In the bathroom, instead of writing out every line item, I estimated a max of 3k because we've done gut jobs for under that.  Nothing in the project was stuff I haven't seen before, so I had a pretty good idea.  

Funding was a combination of cash and a HELOC I had on a rental property. This kept the reno/holding costs low by avoiding mortgage fees.

Here's a number breakdown: 

Purchase Price: $144,000
Renovation Budget: $17,000 ($2,000 OVER)
Total: $161,000

Sales Price: $211,000
Net Profit(After Closing Costs): $33,000

 

That's awesome. Congrats! Do you know where the wholesaler got the property...what the situation was with the seller?

@Jamie McCauley - Congratulations on the flip! I just went through several of your videos, adorable family, great quality, great sound, love your opener, cute little bits - I subscribed! Are you doing all the work by yourself? Is that how you keep the reno numbers down? Looking at your final project I was thinking you spent $20k-$25k, but I don't have a very experienced eye... yet. I look forward to your next project.