Houston, TX - Diary of a First Flip

20 Replies

Hello, BP!!!

Last month I closed on UG1 (Ugly House 1). I’m extremely excited to have landed my first project! Since I dived into real estate investing this spring, I have been on a non-stop learning roller coaster. After procuring my real estate license in March, I spent most days analyzing properties to visit. I spent the weekends driving around town visiting these properties. In case we need a reminder Houston is HUUUUUUGE. When I did find a property where the numbers aligned, I submitted an offer. However, with real estate investing at an all-time high, so did everyone else. After 10 failed offers, I realized I needed to move upmarket, where there is less competition. And, with my “lucky” 13th offer, I landed UG1.

For those who would rather read, some stats on UG1:

  • Located in the Walnut Bend subdivision in Briar Forest
  • One story, four bedrooms, two baths, 2,187 SQFT
  • Buying price: $275,000.00
  • Rehab budget: $75,000.00
  • New Listing Price: $424,900.00
  • Timeline: 10 weeks

The house is what I like to call a “Grandma special.” It was well taken care of and maintenance was up-to-date. The house has new double-pane windows, few roof, new furnish, new electrical box with a 175 AMP, and it even came with an EV charger in the garage. Did grandma have a Tesla?

As you can see from the pictures, the house needs a TOTAL remodel. We’re talking $35 SQFT remodel. We’re talking money. The scope of work is rather extensive. And, I’ll make a separate blog post on comping properties and knowing how to improve to reach maximum after-repair value.

After meeting what seemed like 10 contractors at the house, I finally settled on one that only works with investors. I like their approach, because investors focus on what sells; they don’t have to deal with sometimes overly-critical owner occupants.

The rehab will kick off next week. The journey will take approximately 10 week; I’ll be there to document every step. Stay tuned for weekly updates. I’ll share what went well, what hasn’t been going well, and we’ll learn together.

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hey Matthew I'm in houston too man, I work for a mortgage company and I'm new at this too. But at least you started, that's awesome. I've put in a few offers but, no luck yet though.

Originally posted by @Oswin Grant :

hey Matthew I'm in houston too man, I work for a mortgage company and I'm new at this too. But at least you started, that's awesome. I've put in a few offers but, no luck yet though.

The Houston MLS is a great source of deals, at the moment. You need to submit LOTS of offers. I remember one weekend, I submitted four offers at once. lol

@Matthew Marcelissen   Great post, thanks for sharing.  I'm in a similar boat and starting to look for a very similar property profile.  What caught my eye was your comment on moving up in price to move into more 'rare' air in terms of less investors.   How did you determine how high you needed to go?

And about the deal you've documented here, what was the list price vs what you paid? How did you find the deal? MLS? Do you plan to flip this one?

Best of luck with this deal!

DOM is high for that neighborhood. Your rehab needs to be of high quality in order to sell at a good price. Unless you have your own crew, $75K otherwise may not go very far. By all means good luck to you.   

Originally posted by @Jesse Mao :

DOM is high for that neighborhood. Your rehab needs to be of high quality in order to sell at a good price. Unless you have your own crew, $75K otherwise may not go very far. By all means good luck to you.   

Thanks for the response.  When calculating DOM, it's important to analyze flipped v. non-flipped properties.  The DOM for updated homes is actually quite low, fewer than two weeks.  I'll take some regular pictures of the finish out when I view the property next.

Originally posted by @Mark S. :

@Matthew Marcelissen  Great post, thanks for sharing.  I'm in a similar boat and starting to look for a very similar property profile.  What caught my eye was your comment on moving up in price to move into more 'rare' air in terms of less investors.   How did you determine how high you needed to go?

And about the deal you've documented here, what was the list price vs what you paid? How did you find the deal? MLS? Do you plan to flip this one?

Best of luck with this deal!

Hi Mark- Apologies for the delayed response. For the Houston market, I think $250+ homes work well for flips. The list price was $300k and I paid $275k. I found the deal on MLS after making 12 offers. So this was lucky 13!!

Originally posted by @Candace S. :

same questions as Mark...also, are you financing? If so, how? Cash offer?

Did the house flood?

Hi there- The house did not flood.  And I'm using a conventional loan for the house with a flip loan to fund the improvements.

@Matthew Marcelissen , any updates? I stumbled upon your post and liked the detail you provided. I guess since it was only a month ago you probably haven't even closed on it yet huh? 

My wife and I bought a so called fixer upper. A house to live in post marriage. One month til we sell and close on our next purchase.

$165,000 purchase

$30,000-$35,000 renovation

$260,000 sale

If it wasn't for the wife and a kid on the way, I would be living in a small condo and flipping houses. Unfortunately I have to satisfy her needs and now the babies so I will live through the stories of others haha.

Keep us updated and Good Luck!

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