First Flip

8 Replies

Bought a 3/1 REO in a nice neighborhood in rural Maine. The market is currently enjoying an absorption rate of 3.5 months for properties in the targeted price range. (We are targeting four area codes in a growing area enjoying growth activity around military installations and other industry.)

The details. Purchased with cash for $42k. Estimated rehab budget of $19000, and holding costs of $250/mo. Rehab should take 4-5 weeks. Similar properties are selling at $100k. We obtained a great inspector who validated the property condition and needed repairs.

We're adding a half bath upstairs in addition to general rehab of plumbing, electrical, countertops, and landscaping. Refinishing cabinets, floors, and replacing most electrical fixtures. We have a SOW, a firm budget, and project calendar.

We have contracted a cadre of licensed tradesmen we know personally, and have hired a PT carpenter to perform much of the non-licensed work.

Our ARV for this 3/2 should be approximately $110,000 as suggested by our Realtor. We close tomorrow, and we expect to be relisting the property after the July 4 holiday.

What do you think?

Good deal! I'm working to close my first resell..Your numbers better, but I'm starting in the 70K range ...I'm focusing more attention in kitchen/bath..I'm also including stainless package(stove, microwave, dishwasher)... Since all my rehabbed projects include rentals/owner financing, resell is a new arena...Working to diversify....Good luck!

It sounds good, but make sure the second bath is needed for that price range. Whenever I add a bathroom it tends to go over budget. Your repair costs seem low. I usually put about $30k into my flips, depending on if it needs any big ticket items like a septic system, heating system, etc. What town is it in?

Thanks, Rolanda. We feel pretty good about it so far!

Amy, we're operating in the greater Brunswick/Topsham/Lisbon/Bath area. We've built in a solid contingency line for the unexpected or cost overruns. Solid roof - sans over a bay window that needs replacing. No structural issues. City water and sewer. Only big ticket item we're not 100% sure about is the boiler. Even if we overrun to $25k, we think there's still a decent margin to be had.

We see this as a learning opportunity, so our eyes are wide open...

Thanks for your posts, ladies!

First flip is complete and sold!  Amy, you were absolutely correct; our cost estimate was too low.  We finished over 30k in expenses, but still made a nice profit.  We are now looking for Deal #2 and #3.  Thanks for all of your comments and input!

@Jeff Pelletier , keep in touch as you hunt for more properties. I'm in Bath and always looking, I'd be happy to send some addresses your way if I know what you're after. 

Hey, hope the deal went well. Question... currently rehabbing a buy and hold in Kemmebunkport ME. We have a friend of family that's not a licensed plumber but all we are doing is installing new vanity, tubs, and toilets. We found Maine code saying we can do our self. However code officer is saying because it's a rental we need to have licensed plumber do it. Does this seem right?

Congratulations! I love to see people working on and enjoying their first flip!