Our First Flip

Our First Flip

Investor · Murphy, TX · Member since 2011 · 189 posts · 86 votes
  • Purchase price - $255,000
  • Expected rehab - $80,000
  • Expected ARV - $425,000
  • Actual rehab/carrying costs - $155,000
  • Actual sell price - $525,000
  • Profit - $76,400
  • Time to complete – 7 months to get on market, 9 months to close
  • DOM – 27 days


See link to “after” images here: Our First Flip

The House
This was a mid century 3/2 2300 sq ft home on a large ½ acre lot near White Rock Lake in Dallas. It had a garage conversion that was essentially an extra room with a closet but no bath, poorly done with limited functionality. The home was being used as a rental at the time of purchase. As such, it was not maintained that well. It was still a functional home but needed a lot.

It had substantial layout issues. What looked like your typical master bath was right next to the front door and adjacent to the main living area, totally unconnected from any bedroom. Jacuzzi tub, travertine walk in shower, the works. The previous owners had poured a ton of money into this bathroom, but it worked against the sellability of the house because of its location. Also, the carport location took up almost all of the back yard of the property, so the huge ½ acre lot consisted of a large front yard and very little useable space in the back.

One other cool thing… Ron Howard produced his first made for TV movie, Skyward, on location at this house in 1980. Bette Davis was the lead actress.

The Market
White Rock Lake is surrounded by mature neighborhoods that have appreciated with age. It is close to everything Dallas has to offer and is a very desirable area for young professionals and families. The demand for the area combined with the age and condition of the homes creates a wide range of pricing that is perfect for flippers, and there is a lot of competition. There has also been an influx of large corporations into the Dallas area, increasing demand.

We started this house in March 2015 thinking our best ARV would be in the $425k range. In July, a renovated house across the street sold for a sq ft equivalent of $589k in 2 days. We listed ours at $589k in October, reduced it to $559k after 12 days, then accepted an offer at $525k after 27 days on the market. We experienced rapid appreciation followed by a cool off after the summer months ended.

The Rehab

  • All new plumbing, including new master bath through slab in garage conversion
  • All new electrical
  • Most interior walls are new
  • New drywall and trim throughout
  • New windows
  • New roof and gutters
  • Repaired foundation and drainage issues
  • Removed/replaced bowed stone wall
  • Full cosmetic rehab with a higher end finish (real hardwoods, quartz, marble, etc)
  • New cedar fence, landscaping and stone borders
  • New driveway and demo of existing driveway
  • Added exterior door next to new carport location


Strengths/Weaknesses
After 9 months and $155k rehab, we learned some things about ourselves and this business. Starting with our strengths or competitive advantages: Our GC is also a partner in the business. He has been around construction since birth and is fully vested in our success. My wife is a gifted decorator and has her own staging company; she handled our finish and staged the property. Also, we were able to use all cash on this property. That allowed us time to make mistakes without interest accruing.

We have to get better at project management and budgeting. We had zero knowledge of local contractors going in, so we are still learning how to deal with contractors and what pricing we should expect. We’re also in the process of assembling a small crew. I’m not sure exactly how many flips it will take before we feel like we have it down to a science, but I know we will get better pricing , efficiency and results with each one.

Flip #2 is already in progress and should be on the market in March.

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Most Popular Reply

Arlington, TX · Member since 2015 · 220 posts · 40 votes
10y

Bill, we just purchased our first property today.  if you had 3 things you learned as part of the process that really surprised you along the way, what would they be...?

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  • Investor · Saint Augustine, FL · Member since 2015 · 227 posts · 61 votes
    10y

    Wow great job !

  • Real Estate Broker · Louisville, KY · Member since 2014 · 121 posts · 91 votes
    10y

    @Bill Hinshaw That looks great, any chance you will post some before images?

  • Rental Property Investor · Mesa, AZ · Member since 2015 · 149 posts · 52 votes
    10y

    great job!  Nice work, too... Thanks for sharing...

  • Sales Consultant · Tampa, FL · Member since 2015 · 2 posts · 1 vote
    10y
    Awesome job, looks great. Great profit as well. Congrats
  • Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    10y

    Great job, Bill.  Pretty cool about Ron Howard and Bette Davis.  Did you use that info in marketing?   Where is flip number two?

  • Investor · Murphy, TX · Member since 2011 · 189 posts · 86 votes
    10y

    @Steve Osowicz I will try to dig some up and post them here.

    @Jon Klaus Hey Jon. We didn't include the Bette Davis part in the MLS description, but we did use it on the brochures and open house. Flip #2 is in Canyon Creek in Richardson. I doubt we'll have near as much possible upside, and the spread is tighter. It is a great opportunity to get a little better with our budgeting.

  • Sherman Oaks, CA · Member since 2015 · 16 posts · 5 votes
    10y

    Wow, beautiful home. I would also like to see the before pics.

  • Real Estate Coach · New Zealand / USA · Member since 2014 · 296 posts · 82 votes
    10y
    Bill Hinshaw - great job & really appreciate all the detailed info. Did you find the property yourself - if so, how? - or did you use a realtor, wholesaler etc? Same question for the 2nd property? Thanks
  • Investor · Murphy, TX · Member since 2011 · 189 posts · 86 votes
    10y

    @Steve G. We found both homes through realtors. The first home was not on the MLS yet, and we were able to negotiate a deal with the seller without any competition.

    The second home had been on the market for a while. The sellers had just purchased the home a few months earlier with plans for massive renovations, but gave up before they ever got started. They had trouble moving the home when they put it back on the market. I think the quick turnaround scared a lot of people off.

  • Arlington, TX · Member since 2015 · 220 posts · 40 votes
    10y

    Bill, we just purchased our first property today.  if you had 3 things you learned as part of the process that really surprised you along the way, what would they be...?

  • Real Estate Coach · New Zealand / USA · Member since 2014 · 296 posts · 82 votes
    10y

    @Bill Hinshaw - Was the contract you used, the realtors or your own? 

    @Alfredo O. - Good questions, I'd also like to chime in here and ask the same!

  • Arlington, TX · Member since 2015 · 220 posts · 40 votes
    10y

    Realtor's contract.  and I am buying the house as a wholesale property.

  • Investor · Murphy, TX · Member since 2011 · 189 posts · 86 votes
    10y

    @Alfredo O.

    Congrats on your first property! That is a really great question.

    Where to start. Flipping our first house was incredibly exciting and fun at the beginning and the end. In between, it was a battle of the mind with multiple ups and downs. Having a business mindset, expecting problems and being focused on solutions, setting expectations for contractors... all that stuff is not much fun. But that's the kind of stuff that will determine if your business will flip one house or multiple houses. The process really will stretch you and reveal weaknesses in yourself and your partners. There are thousands of little decisions that have to be made quickly, and conflict just naturally arises when taking on something of this scope. How you deal with those things will make or break you.

    The biggest thing I could recommend is to define your scope of work as accurately as possible up front. Have an experienced contractor go over each thing to help estimate your budget and timeline. Pay him/her if necessary; it is money well spent. Go over your budget and timeline every couple of weeks with your team. Are you on schedule? On budget? Where did you miss and why? Did you add new things as you went? Can you pull it back in in other areas?

    What area is your house in? I used to live in Arlington, just south of I20 and close to 360. I hope you'll update us as your house progresses.

    @Steve G. We used our realtor's contract. Why do you ask?

  • Real Estate Coach · New Zealand / USA · Member since 2014 · 296 posts · 82 votes
    10y

    @Bill Hinshaw  (hmm links not working Bill, sorry) - just curious - there are many way to take ownership of a property, and I was interested to ask if you may have explored any of those methods with this purchase.

    Great information, did you put in a penalty clause to ensure the work was completed on time, or do you feel this could have been counter-productive to the GC?

  • Arlington, TX · Member since 2015 · 220 posts · 40 votes
    10y

    Great stuff and I really appreciate the input.  We currently live in North Arlington near River Legacy Park.  The house we purchased is actually located in Ft. Worth near 820 & I-30.

  • Investor · Murphy, TX · Member since 2011 · 189 posts · 86 votes
    10y

    @Steve G.

    Good question. We haven't used a penalty clause with our subs. Working with subs is an area I think we will improve on over time. 

    We are also utilizing one individual as a contractor with a daily rate. He is working with us pretty much daily at this point. If we can find 3 more similar to him, we may go in more of a "crew" direction as opposed to hiring subs for everything. I know that has implications for workers comp, contractors vs employees, etc and I haven't fully thought through all that.

  • Homeowner · Colleyville, TX · Member since 2015 · 85 posts · 17 votes
    10y

    Thanks for sharing the details.

  • Real Estate Agent · Dallas, TX · Member since 2015 · 18 posts · 6 votes
    10y

    Fantastic work, Bill! The house looks incredible, and the staging by your wife is first-rate. I love the White Rock Lake area and nearly bought my primary residence there last fall. 

    I'm looking at Richardson for deals, too. Buy and hold, though.

  • Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes
    10y

    $100k increase in ARV? that is crazy! is the $75k profit after paying your partner? I'm assuming it is.

  • Investor · Murphy, TX · Member since 2011 · 189 posts · 86 votes
    10y

    @Scott W.

    It's been crazy. I never expected to experience anything like that in the Dallas market. We're typically a more stable market with lower highs and higher lows. 

    The $76k was total profit, split between my partner and I.

  • Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
    10y
    Originally posted by @Bill Hinshaw:

    @Steve Osowicz I will try to dig some up and post them here.

    @Jon Klaus Hey Jon. We didn't include the Bette Davis part in the MLS description, but we did use it on the brochures and open house. Flip #2 is in Canyon Creek in Richardson. I doubt we'll have near as much possible upside, and the spread is tighter. It is a great opportunity to get a little better with our budgeting.

     Bill...great job!! And. Whatever you do, DO NOT undersell the Richardson property. Canyon Creek is one of the 3 hottest areas of Rivhardson, because of the elementary school.  The houses in that area will sell and sell quickly. One question, what was your source on that property?

  • Lender · Los Angeles, CA · Member since 2015 · 121 posts · 28 votes
    10y

    Congrats on your first flip. I love looking at these posts there always inspiring. Thanks for all the details you shared with us. Sounds like you have a great team. Love how the property turned out.

  • Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes
    10y
    Originally posted by @Bill Hinshaw:

    @Scott W.

    It's been crazy. I never expected to experience anything like that in the Dallas market. We're typically a more stable market with lower highs and higher lows. 

    The $76k was total profit, split between my partner and I.

    so your rehab came in double as anticipated and the ARV came in $100k over? boy did you get lucky! man, that sure does appear to be an overheated/bubble market but no one can predict the future.

    congrats - if you can make $ on your 1st flip, you are in the minority.

  • Investor · Murphy, TX · Member since 2011 · 189 posts · 86 votes
    10y

    @Scott W.

    I was wondering when someone would call us out on the 2X rehab. Some of this was our fault from lack of experience, some of it was intentional.

    We knew the market was appreciating rapidly. We decided to go for full market value. Example, we tore out the existing driveway and carport and moved it to a different location so that we could create a nicer back yard space. We totally overhauled the interior layout to make it more functional, which also meant a complete overhaul on electrical and plumbing. Those things weren't in the original budget. We would have done things differently had the market not appreciated like it did.

    Could we have made the same amount with a smaller rehab? Probably so. We wanted the full learning experience and had a good idea that this market would allow us to do that and still be profitable.

    Then a part of the miss on the budget is because we just whiffed. Some parts we under budgeted. Some parts we over paid. A big part of our learning was to go thru and note those things, and to put systems in place to make sure we track it more closely on our next house. For example, we had no idea plumbing is as expensive as it is. All plumbers should be millionaires.

    I agree we were really lucky with this house. 

  • Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes
    10y

    plumbers are the most overpaid, and the most narcissistic, trades people, I know.

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