Dipping my foot in the water

[Nick Mclean]

Investment Info:

Townhouse fix & flip investment.

Purchase price: $387,000
Cash invested: $180,000

Complete gut renovation of my primary residence, 90% of work done by my father and myself. All work was done to remain CHAP compliant to secure a 10 year, fixed tax rate on the property.

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

Wanted to break into real estate in any way possible just to get experience under my belt. This was also going to be my primary residence.

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

This was found online at auction through Alex Cooper.

How did you finance this deal?

Traditional financing through a mortgage lender, cash from my father who is a co-owner.

How did you add value to the deal?

Gutting the property down to the studs. This was a total renovation done in two 6 month sprints over the course of 2 years. Value added by turning a 3 bedroom, 2.5 bathroom into a 4 bedroom, 2.5 bathroom Sprint one was 2nd and 3rd floor, sprint 2 was first floor.

What was the outcome?

The home was appraised twice, once by the lender to remove MI and once by the city to approve the CHAP credit. These appraisals were done before the second sprint of renovations, which was the gut of the first floor. First appraisal was for $580,000, and the second was for $645,000. last appraisal was over a year ago.

Lessons learned? Challenges?

Living in a home you are renovating while balancing a full time job in mortgage lending is extremely challenging. The money saved on doing the work ourselfs was a big help for a first time deal, and the experience you get along the way is extremely valuable. However, for the sake of time and approaching future deals like a business, hiring is essential.