$27k on my first flip!

$27k on my first flip!

Rental Property Investor · Pittsburgh, PA · Member since 2013 · 178 posts · 57 votes

It was a year ago that I closed on my first flip. The night before I closed, I almost walked out on a $4,900 deposit because I got scared. Thankfully, my step father was good enough to walk through with me and calm my nerves. He basically said that even if I break even, the education will have been worth it.

I was pretty picky about the way the house turned out. I had issues I needed corrected. I had my contractor stress about money (Had this with 3 different GC's on 3 separate rehabs). The rehab ran over by 2-3 weeks.

In the end, I had two full price offers on the house before it was completely finished. I sold it a few days after the 90 day seasoning period required by Fannie Mae.

I secured a recommendation letter from the buyer.

I made $27k after all closing, holding and selling costs. That was a true net number.

I read a lot, listened a lot and spent a lot on my education. I can't imagine where my real estate dreams would be if I walked out on that first deal!

Since, I've purchased 5 more properties while I work full time.

What I learned: Educate yourself but more importantly, ACT!

Thanks for reading.

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Elizabeth, NJ · Member since 2014 · 3 posts · 3 votes
12y

I am about to take that first plunge myself, congrats to you! It's really inspiring to hear someone else do it.

See this reply in the discussion

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  • Residential Real Estate Broker · Merritt Island, FL · Member since 2014 · 4 posts · 2 votes
    12y

    Great job, Dan! My husband and I have been talking about investing for years. I finally decided that it's time to educate myself as much as possible and go for it. Going through with it is going to be terrifying and rewarding at the same time. Thanks for sharing your story...it's definitely inspiring.

  • Real Estate Investor · Chicago, IL · Member since 2013 · 50 posts · 6 votes
    12y
    Good stuff
  • House Flipper · East Stroudsburg, PA · Member since 2013 · 1k+ posts · 205 votes
    12y

    Good job and thank's for sharing. I don't believe the sub contractor frustration is ever over. Every time I think I've found the right combination, it turns out the sub thinks I'm working for him on his schedule not mine. I've implemented tight time schedules and after accomplishing my time line goal: I have to wait the 90 days in order to meet the FHA Mortgage requirements; the old hurry up and wait problem, but it is rewarding. Good luck with your next flip.

  • Rick BassettBusiness Member
    Property Manager · Greater New Haven, CT · Member since 2010 · 377 posts · 434 votes
    12y

    Congrats Dan.

    Contractor issues. I always act as the GC coordinating all of the subs and driving the schedule, it's a constant struggle as the subs need to take on other jobs but worth it. I am fair but very firm with them.

    I generally use the same subs at each job (with an alternate for each trade to keep their prices competitive), occasionally I jettison an under performing sub off to the abyss which sends a clear message to the other subs that I'm not afraid to make changes mid-stream if needed.

    I buy all materials, subs do not (except rough items by plumber and electrician). My contracts with the subs are generally 'labor only' and as such I do not have to provide any upfront money to them. My payment schedule is based on % completed in 25% increments, there is usually a bit of push and pull in this area but if you want full engagement it's important not to have payments ahead of the work.

    Bassett Property Management5108 Reviews
  • Homeowner · Ocoee, FL · Member since 2013 · 12 posts · 3 votes
    12y

    Dan the man! Love your honesty and your humility. Not ready to pull the trigger yet as I still have some reading to do. Keep us posted on your next deal.

    27k not shabby at all. Congratulations!

  • Wholesaler · Holiday, FL · Member since 2013 · 571 posts · 221 votes
    12y
    What were the contractor issues? What happened? Can you detail out the woes of it a bit?

    stephen
    ------------




    Originally posted by @Dan Costantino:
    Thanks guys. I've sold another flip and I'm about to put another one on the market.

    It's less scary now but each had issues! Mostly contractor issues!

  • Homeowner · Ocoee, FL · Member since 2013 · 12 posts · 3 votes
    12y

    @RickBassett Nice way to handle the contactor issues. I'll have to print out your post and file it in my REI binder.

  • Real Estate Investor · Bedford, TX · Member since 2014 · 83 posts · 31 votes
    12y

    @Dan Costantino 27K on a first flip is darn good deal, you are doing great! I started out as a wholesaler and when I did my first flip. I just made 11K. Now I only touch the deals that are over 20K profit!

    I mostly agree with you on the contractor issues initially but over the time when you do find a good contractor, keep him busy and they will love you! I now have a contractor working full time for me, I don't even have to go on-site. He sends me weekly updates with pictures on the progress and so far every project has been on track!

    Keep up the good work.

    Cheers!

  • Rental Property Investor · Liberty Hill, TX · Member since 2014 · 285 posts · 166 votes
    12y

    I have a little different take, no offense intended. And this is not really ointed at you personally. I used to complain about contractors too that is until a very experienced investor told me that if I kept having the same problems with contractors the problem wasn't the contractor it was me.

    First who hired the contractor? I did.

    Who made changes to the scope of work? I did.

    How did you find your contractor? Is he licensed? Or did you just hire the first person who gave you a price you liked?

    Did you take into consideration that your change of scope caused the time and cost overruns? What to an amateur (first time flipper) seems like a half day change can take several days and may require inspections before closing up.

    Did you consider your attitude when berating the contractor which you indicate you "had to do". Beating someone up rarely encourages their cooperation or considering your job a priority.

    Are there bad contractors who disappear, absolutely but refer to number one above----who hired him.

    I am not beating you up personally and the questions are rhetorical and it is not necessary to defend yourself. You completed the project and made decent money. That's great.

    You are in process with another job now so did you hire the same guy? Probably not. Are you having he same issues? Are you going to have to hire some one new with the third and fourth project? Pretty soon any contractor who is really professional will have heard about you and will not even consider working for you. Flipping can be a very stressful process why add to your stress by having an attitude about contractors. Find a good one and treat them with respect and you will have much more fun and make more money.

    I am glad that investor had the talk with me 30 years ago it has made a huge difference.

  • Real Estate Agent · Milwaukee County, WI · Member since 2009 · 3k+ posts · 525 votes
    12y

    Congrats

    Will Barnard is excellent resource.

    Good luck moving forward

  • Wholesaler · Holiday, FL · Member since 2013 · 571 posts · 221 votes
    12y
    I have a take as well. Now granted; perhaps some of my problem is that I am myself a contractor. And can easily and happily perform the work of every trade that I can think of right now. I cannot easily be deceived or lied to in regard to the work. I know not to micro-manage and I know that my standards may be a little too Bristol-Fashion for most. OK; I'm cool with that - I like to get along with everybody.

    But I do have a list of work to be completed. And a general order that I want it done in - a sensible work-flow arrangement. And I sometimes have things that I specifically do not want done for one reason or another.

    I find that verbal information is ignored, written information is ignored, and in some cases; work that was specifically not to be done - gets done anyway. I feel sometimes like they are talking about one job and I am talking about another. <g>

    And also: I spell out payments terms. They agree in writing. Three days later they say: OK; now you owe me $1000.

    Wait; you didn't do the work on The Work-To-Do List. And even after you do - the payout is $500. - not $1000. The other $500. is retainage - you don't get it until after the check-list is 100%. It was all spelled out in the the payment terms you agreed to.

    But I did all this other work!

    Why? I told you Not to do that. And you doing it has pissed away the time which should have been devoted to the work schedule we agreed to.

    Well; I'm out of money.

    <g>

    stephen
    ------------------






    Originally posted by @Martin Scherer:
    I have a little different take, no offense intended. And this is not really ointed at you personally. I used to complain about contractors too that is until a very experienced investor told me that if I kept having the same problems with contractors the problem wasn't the contractor it was me.

    First who hired the contractor? I did.

    Who made changes to the scope of work? I did.

    How did you find your contractor? Is he licensed? Or did you just hire the first person who gave you a price you liked?

    Did you take into consideration that your change of scope caused the time and cost overruns? What to an amateur (first time flipper) seems like a half day change can take several days and may require inspections before closing up.

    Did you consider your attitude when berating the contractor which you indicate you "had to do". Beating someone up rarely encourages their cooperation or considering your job a priority.

    Are there bad contractors who disappear, absolutely but refer to number one above----who hired him.

    I am not beating you up personally and the questions are rhetorical and it is not necessary to defend yourself. You completed the project and made decent money. That's great.

    You are in process with another job now so did you hire the same guy? Probably not. Are you having he same issues? Are you going to have to hire some one new with the third and fourth project? Pretty soon any contractor who is really professional will have heard about you and will not even consider working for you. Flipping can be a very stressful process why add to your stress by having an attitude about contractors. Find a good one and treat them with respect and you will have much more fun and make more money.

    I am glad that investor had the talk with me 30 years ago it has made a huge difference.

  • Rental Property Investor · Pittsburgh, PA · Member since 2013 · 178 posts · 57 votes
    12y

    @Martin Scherer

    I will be starting my 4th full blown rehab. I will be using my 4th GC. I have relationships with my 1st and 3rd. The first 3 are not 'the one' that I can fully depend on.

    I tested out the one that I am using on the 4th, and I look forward to working with him. Thus far, he's been good with advice and just doing what he said he would.

    I have talked to the President of my REIA and asked him for some referrals. He kind of chuckled and said, 'good luck'. 'That's the toughest thing about the business.' He also said finding money is easier than finding good contractors.

    I am looking for someone that will not over-commit, deliver what was promised and not cry about money the whole time. I have had 2 GC's that complain about not having money for materials, even when I paid according to or before the draw schedule.

    New rule: If you can't float materials for a few weeks on a credit card, you can't manage a job for me. If your finances are that bad, you can't make clear minded decisions when stuff hits the fan.

    I'm a year into this. I'm learning. I'm networking. I'll find key contractors because I am good to work with, but I won't settle for sub-par work. But mainly because I fail forward. Each time I've missed something, I write it down in my "What did we learn" journal that I separate by property.

    I really appreciate everyone's feedback. This has been an insightful post for me.

  • Rick BassettBusiness Member
    Property Manager · Greater New Haven, CT · Member since 2010 · 377 posts · 434 votes
    12y

    @Stephen S. - good point about managing the order in which Subs perform work.

    My experience is that the Subs interests aren't aligned with my goals or the overall project. Their interest is to get in, make some money and get out as quick as possible.

    Since the nature of what we do as rehabbers is to keep the costs of our projects as low as possible, we really don't leave a lot of 'meat on the bone' (profit) for them.

    I've found that the best way to control their workflow (order things gets done) so that it's aligned with mine is to manage the flow of materials to the job site.

    When I have lumber, doors, windows, drywall, roofing, siding, trim, flooring etc all onsite then the Subs pick and choose the jobs that they want to do regardless of what I want BUT when I roll the materials in just before they need them then the Subs have no choice but to focus on the things that I want done in the order that I want them done.

    Managing the materials flow takes some skill but our projects always are done on time this way.

    This is also part of the reason that I don't let the Subs buy my materials (there are other reasons as well).

    Bassett Property Management5108 Reviews
  • Flipper/Rehabber · Portland, OR · Member since 2014 · 119 posts · 121 votes
    12y
    Dan Costantino Truly inspiring Dan, my hats off to you.
  • Flipper/Rehabber · Portland, OR · Member since 2014 · 119 posts · 121 votes
    12y
    Dan Costantino Truly inspiring Dan, my hats off to you. Could you let us know how you found your deals? Were these properties on or off the market? If off-market, what method of marketing did you use to acquire these deals?
  • Investor · Houston, TX · Member since 2014 · 116 posts · 41 votes
    12y

    @Dan Costantino can you walk us through the numbers on this first flip? E.g., purchase price was X, estimaed ARV was Y, actual repairs were Z, holding costs were A, final sale price was B, etc. Mainly I'm trying to get some insight into how you knew this was a good deal (because clearly your instincts were correct).

    Sounds really exciting and congrats on the success.

  • Rental Property Investor · Pittsburgh, PA · Member since 2013 · 178 posts · 57 votes
    12y

    I thought the ARV would be somewhere between $120k and $130k depending on how the finishes turned out. (Again, this was my first rehab and my first time working with this GC). I could have marketed it for more, in retrospect, but I was overjoyed with turning it in 92 ish days.

  • Rental Property Investor · Cincinnati, OH · Member since 2013 · 292 posts · 280 votes
    11y
  • Toronto, Ontario · Member since 2014 · 615 posts · 172 votes
    11y

    @Dan Costantino 

    Congratulations! Persistance pays, just stick in there :)

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @DL Martin

      We were video taping loan closing when I was hard money lending in the Bay Area back in 1989... this is hardly a new concept.  when you charge hard money rates the borrowers sometimes like to forget the small details so all loan closings were taped

  • Involved In Real Estate · Tuscaloosa, AL · Member since 2015 · 21 posts · 5 votes
    11y

    great story.

    I'm trying to secure funds to get my dad into this working on his first and my second. 

    Hopefully I can get him over the fear hump

  • Fort Lauderdale, FL · Member since 2015 · 20 posts · 1 vote
    11y
    Originally posted by @Dan Costantino:

    @Will Barnard

    Thank you for your reinforcement. I enjoy reading your posts.

    Great idea on the recording because I've certainly had those conversations that were conveniently 'forgotten'.

    On another note.......Today I have received my first approval of lending from a Private Lender for my next project. This will enable me to scale in a strategic way using my own funds and OPM! Very excited!

    Dan, thanks for your awesome success stories! As far as lending, and your funding sources... Would you mind giving some details on how you started money-wise? Did you start with all loans? Did you have a personal savings that helped? Sorry if this is too personal... My main struggle or conflict is how to start with very low funds, and I will soon have my own personal mortgage/loan, so I'm afraid it will prevent me from getting another loan to try my first flip. Any insight will be very appreciated! Thanks so much.

  • Bulawayo, Zimbabwe · Member since 2015 · 1k+ posts · 253 votes
    11y

    Congrats Dan.inspiring and encouraging for a first flip.Noted are lessons of dealing with contractors

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