Just finished my first flip! $30k profit!

144 Replies

Originally posted by @Jerry Lucker :

@Jamie McCauley

Congratulations! Feels great doesn’t it! I only made $20K on my first flip, not bad considering it was a mobile home in a park and I only had $17K total invested :)

Thanks Jerry! It does feel great.  That flip sounds like a slam dunk! 

 

Originally posted by @Jamie McCauley :
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

 

Nice work. So much for the dogma of the Biggerpockets 70% flip rule. If you followed that, you would have never bought this deal.

I think the max purchase price = ARV - fixed costs - rehab costs - profit is a much better model.

 

Originally posted by @Shirley Roberson :

@Jamie McCauley Congrats!! Awesome job! Would like to do the same thing myself. What lender did you use for the HELOC?

Thanks Shirley!  We used a local bank(west Michigan) called Highpoint Community Bank.  It was important to us to find a lender who would lend on rental properties.  I know that Huntington Bank will do this as well. 

@Jamie McCauley I haven't even messed with FB yet. I only use google. FB is almost like DMM, where as you set certain parameters (zip codes,age.....) and those are the people that will see your ads.

Google only shows your ad to people who show intent. By that I mean someone types in "who buys houses in ...." and then they see your ad saying "I buy houses in....!"

I will never mess with advertising in which the user hasn't shown intent first ever again.

Originally posted by @Nick Miles :

@Jamie McCauley great job! What was the biggest surprise on this first flip?

Thanks Nick!  The biggest surprise was definitely how long it took. I was expecting it to take 2 months and it took 3.5! 

Originally posted by @David Abbate :
Originally posted by @Jamie McCauley:
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

 

Nice work. So much for the dogma of the Biggerpockets 70% flip rule. If you followed that, you would have never bought this deal.

I think the max purchase price = ARV - fixed costs - rehab costs - profit is a much better model.

Thanks! Numbers were a little tighter than I would have hoped, but to me it was a deal worth doing.  I was looking for something instead of sitting on the sidelines.  

 

Originally posted by @Nathaniel Hovsepian :

@Jamie McCauley I haven't even messed with FB yet. I only use google. FB is almost like DMM, where as you set certain parameters (zip codes,age.....) and those are the people that will see your ads.

Google only shows your ad to people who show intent. By that I mean someone types in "who buys houses in ...." and then they see your ad saying "I buy houses in....!"

I will never mess with advertising in which the user hasn't shown intent first ever again.

Thanks so much for the advice!  I will definitely look into this!  I am familiar with adwords as it is how I first found success in my main business(wedding photography).  

 

Great job! Did you have experience in some of those trades prior to getting into real estate business? 

Doing all the work yourself is exhausting, should be proud of yourself. 3.5 months aint all that bad for your first one!

Originally posted by @Brian Ellis :

Great job! Did you have experience in some of those trades prior to getting into real estate business? 

Doing all the work yourself is exhausting, should be proud of yourself. 3.5 months aint all that bad for your first one!

Hi Brian!  Thanks!  I have done bathrooms and kitchens in our own homes before and also rental properties, so I had some practice.  It was exhausting, I was glad when I crossed the finish line!  

Originally posted by @Will Barnard :
....
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. 

It's not necessarily a "mistake", unless you have been in the trades, or a long time home owner, "doing it yourself" the first time (or few times) has the education benefit of learning what you don't know.  Plus, on the first few, you just might not have the upfront cash to "hire it out"

For example, I do my own electrical in my personal residence, and from that, I NOW it doesn't "cost" a lot in materials for electrical work (aside from some specialty breakers, GFCI's, etc.), but the labor is more intensive than you might think, so that $3500 bid is not unreasonable, unless it has $2k+ in materials....I also know I am not going to do the electrical in my REI due to the time/effort involved even though I could save $2.5K on that $3500 bid...it's not worth the week It'll take me, plus the "permitting lag" that happens if you aren't a local tradie, which sets back pretty much everything else, drywallers, flooring, cabinetry, paint...etc. Same with Drywall, I know what good drywalling takes from having done my own, and choose to hang it myself, but hire professionals to mud and tape and do the skim coat. Painting...depends, etc. You find these out from doing.

But congrats!  I don't do flips but maybe I should look at them :D  +30k in 3.5 months....nice.


Jay

 

AWESOME JOB! Wishing you the best in all your REI endeavors. I'm in contract for my first flip also ... its an FHA buyer so Im hoping that all goes well and we close on time in about a month.

@Jamie McCauley thats ok, not great.  but now what ? You need to do it all over again, Flipping is a job, dont get me wrong a good one. lol. I have flipped about 500 props in the last 6, 7 years. I wish I held more for cash flow. Residual is what its all about. I am actually making money as I type this LOL....... Wealth is created by long term plays, not fix an flip...... All the best to you 

BTW after taxes, all your carrying costs, true net us about 20k. I assume it took 6 months ish  start to finish ? 

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