Investor · Hoffman Estates, IL · Member since 2014 · 434 posts · 185 votes
So I purchased one house at the end of Feb and it's still not finished being rehabbed, but about 2 weeks after that I bought another house (house #2). We finished it up and after a week on the market we accepted an offer at 97% of list price.
It's a FHA buyer so it can't close until mid July but I will make a profit on it between 18-20k after all closing/realtor costs.
They say that a successful 2nd flip just means that you lost less money than on your 1st. That's too true. The 1st property that I've got (almost done) will probably end up breaking even, or possibly losing up to 15k. But if you wash the two of them together it's still going to be a net profit, and now I know what I'm doing.
Congrats Scot on taking the steps and moving into 2nd flip too. Hopefully I'll be following behind as I still work on getting my team and networking. Keep up the good work and continue to share and motivate.
Congrats Scot on taking the steps and moving into 2nd flip too. Hopefully I'll be following behind as I still work on getting my team and networking. Keep up the good work and continue to share and motivate.
congratulations from Florida. Great job! I loved how you changed the inside,especially that strangely cut walk through. On the outside, you were able to replace all of that white stuff with nice green grass. Great job. We dont have a problem with that white stuff down here.
Scot Howat, what if you did a lease option on your first flip? Maybe you could make out better. Just thinking. You could get $3000 to$ 5000 down for a lease option contract, calculate some appreciation into the future sale price two years down the road. They would be responsible for all repairs. You make the payments cover your piti and usually lease option payments are a liitle more that apply to purchase. If they dont exercise the option in a couple of years you have made more money.
@Scott Weaner - It's just a neutral beige color in the kitchen. The original color was a light green.
@Scott Harper -I don't know much about lease options but I think that's a great idea. The only problem is that I've got a 12 month loan on it, so I guess I'd just have to refinance it with a conventional loan. There won't be any repairs, we're ripped through almost everything in that 1st house (the flop).
The flip looks amazing! perfect job id buy it if i could lol but i need to start my mission for my first lead! keep it up i hope to be doing well like you soon!
Great work Scot! One question, now that you have (almost) done 2, what are the biggest lessons you have learned or what would you have done differently?
We budgeted 20k for the rehab, and the final tally was 20,800. There were a few unexpected things but nothing crazy.
I learned a little bit on this one, but a ton more from my flop. It'll be 10x easier on deal #3.
The biggest lesson I learned is that there is only 1 number that you truly have control over, and that's the purchase price. Ultimately things can (and will) go wrong and there's nothing you can do about it AFTER you've bought the house. You need to budget for unexpected things, and you need to know what can go wrong and factor that in BEFORE making offers.
Hi Scot, Congrats! Do you mind elaborating on your financing? Was the 12M loan from a private investor, bank, etc. How much of your own cash was needed? Trying to get an idea of financials. Thanks!
Congratulations! I can relate. We bought our first site unseen at an auction. Ended up being a tear down. Nothing was to code. So by the time we went through every board (building, planning, zoning) for consent to rebuild due to variance issues, it was the dead of winter in Upstate NY! Being we had to pour a foundation, we couldn't event get started until March this year! So we are now in the final stretch. The area is beautiful, but apparently has a bad rap from its past. We are now under contract for our second as well. (third too, but major foundation issues, so may have to walk from that one ... we'll see!)
So my biggest tip is location, location, location! Do your due diligence and do your research.
And a for your weed issue, overseed! Go back over the lighter areas with more seed. Grass will choke out the weeds. Just be careful not to clump! Be blessed in you future ventures!
I'm typically a buy and hold investor, and have been starting my due diligence on flipping as the market here in Atlanta comes back to life. The biggest issue I am trying to get my head around is taxation. What are you accounting for as tax expense? I've seen flips county as ordinary income not capital gains (@15%) plus you have to pay self employment taxes on it. Any thoughts? Thanks. Houses look great!
Beautiful job on the kitchen. Were the appliances just for show or is that standard in your area? If not, what made you decide to add them into your budget? Great work on your first official flip.
Very nice job! I like your choices of colors etc. Don't feel too bad one that's a flop. A lot of the houses that have been sitting empty for 5 or 6 years seem to be coming onto the market now, at least in California, but probably nation wide. They are ruins. I've been looking but not buying. "course at this point I only want one. But- have seen a lot of them bought and either just there or torn down. Or worse- had a lot of work done and are now just sitting there- people ran out of money. You're ahead of the game now as you know what you don't want.
My mortgage was with a small local bank. 12 month Interest Only payments at 7.25%, 75% LTV of the purchase price, about $2800 in fees. I had to come up with the downpayment and rehab costs.
I haven't looked into a 1031 exchange yet, I'll let my accountant tell me what's best. He's pretty knowledgable, and that's what I pay him for.
I included the appliances because that's standard for my area, and I made sure to budget for them. The package was only $2049 for the 4 pieces (no washer/dryer).
Looks like you got 2 down. Great job. Keep it up. Only one suggestion. Get your real estate license ASAP. This way you don't have to pay a realtor for commissions.