My First Flip - An Amazing Experience!

My First Flip - An Amazing Experience!

Flipper/Rehabber · Miamisburg, OH · Member since 2014 · 161 posts · 64 votes

Wow! Where to begin!?!

A quick background on how I got involved in real estate investing.  I started a new job a couple years ago.  About a year in, my boss asked me if I was interested in retiring in 10 year.  I obviously said yes!  He started talking to me about real estate investing.  He has 3 duplexes in an upscale neighborhood of Cincinnati that cash flow very well.  So I started digging around and found Bigger Pockets.  I spoke with the wife about this and she wasn't really on board with the whole rental thing.  So I brought up fix and flips, which she was a little more cautiously open to due to the "short term" nature of owning the property and not dealing with tenants.  Now that the first flip is done, I think she's more on board with fix and flips or rentals. ;-)

Looking back on the last 6 months, I really didn't know what I didn't know!  Thankfully I have a good realtor that has worked with investors and knows what's needed to buy a house at the right price in order to make a profit.  They say you make money when you first buy a home - well without him, I probably wouldn't be writing this success story!

We put together a search in suburbs on the north side of Cincinnati primarily in 3 good school districts - Lakota, Mason & Sycamore.  It probably took us about 2 months to find the right property because it was my first 1 and I really didn't want to deal with a "train wreck" for my first property.  The house had been sitting on the market for about 8 months and was extremely overpriced - starting at $109k and had slowly fallen to $90k.  We took a chance and put an offer in at $60k.  After a little back and forth, we agreed on $62,750.  We closed on the house on 2/25/14.  I used a construction loan for $84k and borrowed $20k from a good friend to fund the down payment on the loan.

Over the next 3 months, with the help of my parents and my father-in-law we rehabbed the home.  As with any first time rehab, I completely whiffed on the budget!  I had $21k budgeted for the rehab.  Once it was all done, I came in at $27,637.94.  Taking a step back to look at what happened, I really only whiffed in 2 areas.  I had a new roof, gutters and soffits put on the house.  I had budgeted $6k for this.  Ended up being almost $9k.  The other item was windows.  I wasn't planning on doing windows as they didn't look horrible - just needed a little work.  Well that didn't work out and we ended up replacing the windows for $3k.  The rest of the budget items weren't way off - saved here and overspent there.

Put the house up for sale on 6/9/14 for $139,900.  Had 5 showings in the first week and received an offer for $135k after 7 days on the market.  Had a few minor things come up in the inspection that were taken care of and that was about it.  They had some issues on the loan that delayed closing.  But ultimately closed on 7/31/14.

Purchase Price - $62,750

Rehab - $27,637.94

Carrying Costs - $3,098.39

Commissions, fees, etc - $8,316

Seller paid closing costs - $1,000

Interest on hard money loan - $5,000

Total Expenses - $107,802.33

Sale Price - $135,000

Profit - $27,197.67

It was a pretty grueling 3 months of work, but in the end it was a great learning experience and I have a degree from the School of Hard Knocks!  I've learned that in order to grow this business, I need to get out of the rehab part of it.  I'm already in talks with the contractor that did the roof to do the whole rehab.  We've looked at a couple houses together and his prices are inline with where I think they need to be.

Sorry for being so long winded and thanks for reading!

BEFORE PICTURES!

AFTER PICTURES!

Random before and after shot of the hallway.

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Most Popular Reply

Real Estate Investor · Middletown, OH · Member since 2014 · 30 posts · 14 votes
12y

You did an awesome job Tim. Great looking house and even better looking profit. If you need free labor help on your next flip then fill free to contact me.

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  • Architect · Louisville, KY · Member since 2014 · 94 posts · 47 votes
    12y

    Congratulations on your baby too! We have a 4 month old, and they sure make it hard to get any work done! But it doesn't last long, so enjoy!

  • Real Estate Agent · Bronx, NY · Member since 2013 · 40 posts · 6 votes
    12y

    Hello Tim,

    Great  Job on your first  flip !!!  Much success in the future and it is about never giving up

    the way you did .

    Francisco

  • Lebanon, OH · Member since 2014 · 15 posts · 2 votes
    12y

    @Tim G. 

    Glad to hear everything worked out with the closing! Strong work my friend.

  • Massapequa, NY · Member since 2010 · 53 posts · 13 votes
    12y

    @Tim G.,

    Beautiful job. Congratulations!  It's stories like this that keep all of us motivated to move forward.  We all benefit a little bit when we hear about a success.  Thanks for sharing yours.

    Just curious, did you ever happen to take a moment and figure your hourly wage from the deal?  I mean taking into account all the physical labor of construction, the searching, finding people to work with, etc.  If you added all of that time up and figured your hourly wage, where would it fall?

  • La Quinta, CA · Member since 2014 · 1 post · 0 votes
    12y

    Congrats on your successful flip! In the 3 months you spent working on that deal, how many hours were you putting in per week? What I mean is, was it a full time job?

  • Flipper/Rehabber · Elkhart, IN · Member since 2014 · 197 posts · 41 votes
    12y

    Looks great! Thanks for sharing. 

  • Contractor · Chicago, IL · Member since 2013 · 105 posts · 28 votes
    12y

    Congrats! You worked out the money well, even with ah HML loan of 25%.

    Did you get an inspection prior to purchasing? If so, did the inspector call out the roof needing the replacement? 
    I know not pricing major repair items like that could really increase costs. 
    Looks like your RE agent deserves a nice bottle of wine for his help or other gift for his help :D

    Wish you the best! 

  • Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes
    12y

    Reminds me of a Jimmy Buffett song: "Once that bug bites you, you live with the sting".  You get unemployable pretty quick in this biz.

    I still GC my own rehabs, but its my least favorite part and easiest to pay someone else to do.  You'll def need to get rid of doing things yourself to scale it past 6 a year or so.  Way less than that if you still have a J.O.B or are actually doing the work.  I'm planning on hiring a foreman once I get the 4 I'm doing now sold off.  You can GC that stuff and not need to be there if you get the right guys in place.  I write lists of what needs to be done, agree on payment, then go to check on things and leave checks.  Still takes being there a few times a week (and I actually like to check on them daily), but no way would I spend more than an hour on a jobsite.  Your job as an investor is not to swing a hammer and mow grass.  Its pretty easy to buy a job instead of an investment if you do it the other way.  Nothing wrong with that, and its better to do more on your first few, but you need to understand that if your profit is half you doing work, that its not all profit.  Depends on what else you could be doing with your time.  

    Rehab looks great, numbers are in line.  You did a hell of a lot better than I did on my first one!!

  • Bakersfield, CA · Member since 2014 · 22 posts · 0 votes
    12y

    Great post!!! I hope to have a success story like that in a couple months as well!!

    CONGRATS

  • Investor · Westminster, CO · Member since 2009 · 1k+ posts · 1k+ votes
    12y


    Great Job @Tim G. !!  You just did better than 99% of First Flips out there.  I have never flipped a home, but I have purchased, renovated and then rented it out.  Nothing like passive income.  A couple of things from my experience.  On your first 2-3 Flips, figure out your renovation budget, AND THEN DOUBLE IT.  The Goal is to come in UNDER your budget, and by doubling it, you vastly increase the chances of coming in under budget.  The exception is if it is a HUGE, six figure renovation, then add 50% to it on your first few.  After you have done a few, then you can lower the percentage your raise is, like 10-20% for contingencies and cost over runs.  The other thing is to negotiate the sales commission, especially if you use the same agent for buying and then selling.  On my last sale, I saved $3,550 on commissions because it was the third house my agent sold for me.

    Very good job, you got that engine started and entered the race. Glad to see another successful REI!!

  • Rental Property Investor · AZ · Member since 2013 · 213 posts · 50 votes
    12y

    What nice work @Tim G. !   Congratulations and thanks for sharing.  Do you mind if I ask what the materials are that you used in the bathroom?

  • Investor · Omaha, NE · Member since 2014 · 56 posts · 2 votes
    12y

    @ Tim G. - Congratulations on accomplishing your first fix and flip. Wishing the best on your next deal. 

  • Investor · Houma, LA · Member since 2014 · 162 posts · 40 votes
    12y

    @Tim G. 

    Congradulations! Can you please explain the part where your friend gave you 20k for down payment? I've heard you should never finance a down payment, did you have to pay him back? How did you get around not paying him back that 20k, and if you did pay it back did he charge interest? Did that loan affect your numbers at all?

  • Investor · West Suffield, CT · Member since 2013 · 106 posts · 42 votes
    12y

    Great job, Tim! 

  • Rental Property Investor · Columbus, OH · Member since 2013 · 117 posts · 16 votes
    12y
    Nice job on the flip. It looks like it went really well for a first flip (or even a 20th flip.) @Karl Pierre loved your advice. It makes a lot of sense, and is something I have been thinking about lately. Thanks, David
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    12y

    Well done! @Tim G. 

  • Houston, TX · Member since 2014 · 1 post · 0 votes
    12y

    Tim, 

    Thanks for sharing.  I'm glad you showed the breakdown of the numbers.  My wife and I are in the same situation you described.  We are still doing home work and are getting connected to different people.  We hope to do the same soon. Congrats on your success!  

  • Real Estate Investor · Fort Pierce, FL · Member since 2014 · 132 posts · 57 votes
    12y

    Really good job, thank you foe showing us what your deal was, and putting the numbers and pics out there.

  • Flipper/Rehabber · Miamisburg, OH · Member since 2014 · 161 posts · 64 votes
    12y

    @Karl Pierre great advice.  I definitely don't want to get stuck with a house if and when the market busts.  I also plan to sub out the work on future fix and flips.

    @Krysti Sam where is your rental property located in Cincinnati?

    @Nicholas DeLouisa Jr  @Maryjoe Romando we have about 800 hours total in the rehab.  That's myself, my parents, father-in-law and subcontractors I used for the roof and doing some demo work inside.  The rehab took about 90 days to complete.  So not quite full time but it sure felt like it sometimes!

    @Joe Demonte we did not have an inspection done on the house.  But I did walk through it with my GC buddy and we talked about a bunch of different things.  Ultimately there weren't any surprises that came up during the rehab.  The roof was in poor shape - edges of the shingles pulled up everywhere.  The soffits were also rotted out and the gutters were missing in spots.  I've given my realtor some referral business, so I think we're even! ha!

    @Mike McKinzie good information.  I'm not sure doubling the rehab budget is a good idea....you can price yourself out of a lot of profitable homes that way trying to buy it too cheap.  Knowing what I know now though, I will definitely be a lot smarter on how I come up with a rehab budget on future projects though.

    @Account Closed The $20K from my friend was between him and I. The bank wasn't aware of it. My credit, job and bank statements are strong enough to get the loan on my own. When we closed a couple days ago, I had a check for $25k written to my friend added to the HUD. So he got his $20K back plus 25% interest.

  • John CasmonPro Member
    Cincinnati, OH · Member since 2013 · 1k+ posts · 1k+ votes
    12y
    Awesome! Congrats on your first flip!
  • Real Estate Agent · Charleston, SC · Member since 2013 · 424 posts · 99 votes
    12y

    @Tim G. How do you recommend finding deals? I'm looking to do a fix and flip using a HML but don't know where to look for deals. I have slight wholesaling experience but I've never been on the end of the deal where I'm looking for the property.

  • Investor · Houma, LA · Member since 2014 · 162 posts · 40 votes
    12y

    @Tim G. So with that 25k included how did you not profit ~2k?

    27,000 - 25,000 = 2,000

    Please tell me where I am going wrong. 

  • Rental Property Investor · AZ · Member since 2013 · 213 posts · 50 votes
    12y

    @Tim G. Thanks for the info Tim!  I find out Monday if my offer on a fix and flip here was accepted and I really like what you did with that bathroom and the color scheme.

  • Professional · Jefferson, GA · Member since 2014 · 5 posts · 0 votes
    12y

    Congrats to you! Just the motivation I needed to keep going. Thanks!

  • Michael SpinePro Member
    Real Estate Broker · Holly Springs, NC · Member since 2010 · 53 posts · 14 votes
    12y

    Nice job. Thanks for sharing. Best wishes for more success.

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