Happy First Reno Experience.
Investment Info:
Single-family residence fix & flip investment.
Purchase price: $25,000
Cash invested: $50,000
Sale price: $145,000
It was our first flip. It was a 1241 sq. ft. 2 bedroom, 2 bath condo with office area, fireplace and attached 2 car garage. The condo complex was well maintained and near a college and highways with easy access to downtown. Its infrastructure was in pretty good shape but cosmetics were terrible with water damage, missing toilets, sinks, appliances, torn or missing flooring and large holes in the wall.
What made you interested in investing in this type of deal?
We listened to hours of Bigger Pockets podcasts, learning as much as we could. Initially we wanted to invest in small multifamily properties, but happened on this property first.
How did you find this deal and how did you negotiate it?
This deal came to us through a friend with an out-of-town friend who owned this highly distressed property. We entered contractor estimates into the BP property Fix and Flip analysis tool and offered the maximum price indicated in the analysis. It was very low, but with patience and the knowledge that the owner had major family and long distance maintenance issues to deal with, we were able to make the deal.
How did you finance this deal?
We financed it with a Home Equity Line of Credit Loan.
How did you add value to the deal?
I believe design played a big part in our success. The competitive properties were mostly plain vanilla. Nothing in this price range offered any details like up-to-date color pallets, shiplap siding, butcher block-like counters, black and white cabinets or cute coat cubbies. These details were all relatively inexpensive things that we could build and/or paint ourselves without having to pay for extra labor.
What was the outcome?
We got lucky in that the 4 month reno was finished just as the 2018 economy and spring selling market hit their peak. We kept to a tight budget. In reflecting on the bidding war that ensued, we believed it was the design scheme that created the buying frenzy. We set the asking price daringly high, and ultimately it sold for $13,000 over that.
Lessons learned? Challenges?
It appears that design mattered in this working class market. I think buyers recognized the value of design, but it was just not typically available to them.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Because I was a previous RE agent, we didn't use an agent but instead listed the property ourselves on BuySelf.com. Even though this is a relatively new company, we felt that by and large with was a good site to use. However they do require you to use their title company.
