First Investment Property

[Andrew Thomas]

Investment Info:

Single-family residence fix & flip investment in Cartersville.

Purchase price: $240,000

Lipstick flip. 3/1 full brick, adding 2nd bathroom, painting cabinets, interior walls, trim, etc. Securing with SimpliSafe purchased thru BP. Purchased from a local flipper; his team estimated $12k rehab, including bathroom.

BUY:
Private money $13k (out of $50k available)
HELOC on personal residence $50k
Hard Money Loan $180k

REHAB:
Private money or personal funds

What made you interested in investing in this type of deal?

Want to start buying rentals. However, a friend (who is a local flipper) suggested I instead start by doing a few flips for quick cash to build up a nest egg quickly, which I can then use for the buy & holds.

How did you find this deal and how did you negotiate it?

Have been asking my friend to keep me in mind if he found any "simple, quick, beginner" flips. He is running five flips right now, and most of his are longer term projects, with fairly extensive renovations. He suggested this for the more gentle learning curve, and provided contractor suggestions.

I didn't negotiate it. It's my first project, and I know I'll need lots of help and counsel, so I figured it would be best to just pay and not try to beat them down on the price.

How did you finance this deal?

$5k - Personal funds = Earnest money of $5k
$50k - Personal residence HELOC = Down payment of $50k
$50k - Private money from a friend = Down payment of $12k, balance for holding costs & rehab
Total of $62k for closing day
$180k - Hard Money lender

How did you add value to the deal?

1950's era home. Currently 3/1. Existing bath is full tiled shower only (previous owner was older, single w/ no kids). Adding 2nd bath w/ tub for families w/ kids, pets, etc.

Kitchen is dark finish, solid wood paneling. Painting cabinet doors and frames, adding granite counters. May also paint the wood paneling a lighter color.

What was the outcome?

Closing is tomorrow, so I don't know the outcome yet.

I will return to update this as the project completes. Expected rehab is about 6 weeks.

Lessons learned? Challenges?

Financing the first deal is a PITA, and everyone wants their pound of flesh, plus a few extra ounces. Once I have the first done, know the process, and have a track record, it should be better. Having all funds in one bank would also make financing smoother.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I will recommend a couple when I update this. The agent was very patient helping me get things together, and her lender is AMAZING!

[Brenden Mitchum]

Congrats @Andrew Thomas!! Stoked to see you getting into the game, my friend!

[Andrew Thomas]

I was trying to add this to my "personal profile / portfolio", and I ended up with this thread. I didn't realize it would be public. Can't edit it to add the expected ARV / comp info, which I forgot to include, so adding as a reply. :-/

Purchase price = $240k
Appraised as is = $267k
ARV w/ 2nd bath = $282.5k

Expected holding costs = ~ $3k/month ($1.3k HML, $750 HELOC, $625 PML, utilities, security, garbage (AKA taxes).

Expected reno time = 6 weeks. It's supposed to be 70* the week between Christmas & NYE, so I plan to paint the exterior window trims, and pressure wash the driveway & exterior brick. The back patio area is concrete, covered with loose bricks, with 3-4 railroad ties for steps down to the yard. Those steps need to be replaced or rebuilt. 

[Andrew Thomas]

Originally posted by @Brenden Mitchum:

Congrats @Andrew Thomas!! Stoked to see you getting into the game, my friend!

 Thank you. I just saw your reply. I've been busy with the flip and other stuff, and haven't been active on BP lately. :) lol

[Andrew Thomas]

UPDATE:
Closed almost one month ago, and haven't accomplished much so far. Christmas was a couple days after closing, and wifey wasn't keen on me being at the flip during the holiday. Mom visited from out-of-state for a few days. Didn't feel great either. By the time I started feeling better and holidays were done, it was back to the day job, and two weeks had gone by. 

While the temps were in the 70's between Christmas & NYE, I met with a plumber, painter, and landscaper. I also got outside window trim painted on the front side of the house, which is ground level, and which people will see. The back side of the house is 8-12+ feet above ground, so not as visible without a ladder. Temps have been too cold to paint. 

Inside, I opened a couple of walls on one side, to better visualize (I'm a "visual person") how things are built, electricity is run, etc. Currently, there's a 6' opening between the kitchen / DR area into the LR area. I'd like to "shift" that over about 3', closer to the fireplace, and close about 3' of the wall that is now open, adding a couple of interior dividing walls. This would provide a better "flow" inside (IMO), and possibly a "suite" for the primary bedroom. 

However, the wall appears to be partially load-bearing in the current configuration. I've contacted a structural engineer to schedule a conference, but haven't heard back yet. Haven't heard back from the other three contractors yet either. 

Have been working on layouts. Bought some track lighting for the kitchen. 

Meeting a Realtor on Friday. She's a friend from church, and loves interior design. She planned the renovation on the century-old farm house she and her family are moving into soon. Anyway, she's coming by to provide some ideas on renovations, colors, etc. As a Realtor, she's constantly in houses around the area, and knows what is popular with buyers, and what sells well. So, that is the current status of my first project.