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.
Congratulations on a job well done! Thank you for sharing the pictures. Like others have said, I think you struck the right balance by completely transforming the kitchen and not overdoing the bathroom which looks very nice!
Great inspiration to the rehab I'm about to start for my new rental.
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.
Well said. Congrats on pulling the trigger and jumping into the deep end of the pool Scot. My first flip was a flop. I lost $2,500 on paper but it was a really good learning experience that I couldn't and didn't get from any book, course, or REIA meeting. I just put an offer in today on another house and I was much more confident with why I was offering the price that I did. Like you said... the purchase price is where you have control. It's where your money is made (or lost). That was my mistake on #1.
Hey Scott way to dive in and get your feet wet. That's really the only way you'll learn.
With your 12 month loan were you able to pay it off early? If so was there a prepayment penalty? I'd be interested in using a loan like this on a future flip.
There's no prepay penalty. It's a good loan but it has it's drawbacks. I can't hold title in a LLC or Corporation, and it's a relationship lender. Right now I can only get the 1 loan through them, but after it's paid back we can start to talk about getting multiple loans at a time.
It was on the market for about 11 days before we received the offer we ultimately accepted. Had about a dozen showings.
I am also interested in the gains tax or if you decide to do a 1031 exchange and your process with that. I am still researching and learning my market but plan to do my first deal within a year. Congratulations on a successful flip!
Looks great! Fantastic job on your first few flips! The loan you have with your local bank is a great deal. Thanks for sharing your story!
Correct me if I'm wrong, but I believe you can only 1031 exchange what the IRS will call an investment property, which means you need to have rented the property out for a significant amount of time. I was at a 1031 exchange seminar and the Qualified Intermediary's attorney said that they advise their clients to have held the property as a rental for 24 months. Consult your tax professional for sure.
You are not allowed to do a 1031 on a flip transaction. Flips are considered inventory and ARE NOT held for investment like a rental or vacant land held over time to appreciate.