I did it! Flipped for ~50% ROI

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I did it! Flipped for ~50% ROI

Dante Pirouz
Investor · Almont, MI · Member since 2015 · 360 posts · 302 votes

First of all thank you to the BP community and @Joshua D. and @Brandon Turner for all that they've done for someone who was a total newbie 3 years ago!

I'm a "buy and hold" buyer with 4 rental properties in the Thumb (google that if you don't know where that is!) in beautiful Michigan! I bought a property intending to rent it out but the zoning had changed in Port Huron, MI and didn't allow it. My husband chided me for making that mistake (Darn it!!) but the wisdom on BP allowed me to figure out I could flip it and use the $$ to buy other things and that's what I did. After about 60 days on the market and we sold it for $65K after buying it for $30K from HUD with about $7K reno budget. We closed last week in a quick close and the cash feels so good in the bank account. I still can't believe it could be done but it sure can with the help of BP!

Now in addition to buying a rental in the right part of town (no duh!), as a reward I get to buy a cute "tiny house" on 3 acres by Lake Huron for $5K down on a nice land contract (so much better than buying an expensive purse or something)... I couldn't be happier!!

And now my husband has to eat his humble pie re: RE investing (plus a nice steak dinner on me) ;)

Before and after pics below!

BEFORE

(That's my tireless and patient RE Agent Paul Steward in the pic who puts up with my investing trials and tribulations)

AFTER

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Rick Maningas
Flipper · Milwaukee, WI · Member since 2016 · 66 posts · 12 votes
10y

First off, congratulations. That is wonderful news. 

I wish Milwaukee had a zoning board to limit or monitor rentals. I deal with buy, rehab and sell owner occupant properties and there is nothing worse than seeing a neighborhood going down the tubes because of rentals. 

When talking ROI I like to talk about gross ROI and annualised ROI. Gross ROI is just taking the net profit divided by your total investment. $25,000 net profit divided by $100,000 investment equals a gross ROI of 25%. This ROI does not take into account how long it took to earn your profit. If it took you six months, in theory you could then do two deals a year so your annualised ROI is now 50%, or $50,000 profit divided by the same $100,000 investment. If it took two years to make $25,000, your annualised ROI is reduced to 12.5%. Just a few extra thoughts based on some of the additional comments.

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  • Kurt Bouma
    Investor · Dorr, MI · Member since 2015 · 23 posts · 4 votes
    10y

    Congrats. I'll try and keep tabs on your REI progress on here. I am from Grand Rapids and currently have 1 multi family (3 units) and one single family. Looking to expand the collection so it's good to hear from other Michigan investors!

    0Reply
  • Russell Naylor
    Colorado Springs, CO · Member since 2016 · 214 posts · 58 votes
    10y

    Looks awesome, way to work around the issue and come out on top! Congrats!

    0Reply
  • Ayo Oredugba
    Brownstown, MI · Member since 2016 · 5 posts · 2 votes
    10y

    Congrats. Way to go!!!. Looking forward to doing that myself.

    0Reply
  • Franky Juwana
    NY · Member since 2016 · 116 posts · 29 votes
    10y

    congrats @Dante Pirouz , what do you mean when you intend to rent but zone changed and didnt allow it.  is this a local law or a general law that exists? 

    thank you, and congrats again.

    0Reply
  • Dante Pirouz
    OP
    Investor · Almont, MI · Member since 2015 · 360 posts · 302 votes
    10y

    @Franky Juwana From what I understand, some cities decide they want to minimize the spread of rentals in order to promote SFR homeownership so they restrict the zoning to residential R (no rentals) rather than residential plus multiunits R1 (mixed). Port Huron has a Rental Certification department that issues certification (and fines for blight and other building violations) and without it you can't evict in the courts and can get severely fined if your tenant reports you or they find out. So I guess you could rent under the table but it puts you at tremendous risk...we had to either sell it as a land contract or sell it outright...no rental, no lease to own or anything similarly. Now I know when I look at a new area I google whether the city or township has a Rental Cert office and then I call them and chat them up to see if they have some arcane rules before I buy.

    0Reply
  • Bhekizwe M.
    Bulawayo, Zimbabwe · Member since 2015 · 1k+ posts · 253 votes
    10y

    congrats.looks great

    0Reply
  • John Clark
    Investor · Pinckney, MI · Member since 2015 · 95 posts · 24 votes
    10y

    Nicely done.  Knowledge is power.

    0Reply
  • John HornerPro Member
    Flipper/Rehabber · Columbus, OH · Member since 2013 · 1k+ posts · 655 votes
    10y

    Nice work, looks great!!!

    0Reply
  • Robert SpencerPro Member
    Investor · Port Huron, MI · Member since 2016 · 58 posts · 14 votes
    10y

    That's awesome @Dante Pirouz!   Congratulations.  Are you a member of PHALA (Port Hron Area Landlord Association)?    I'd love to hear more about it. Maybe if you are going on PHALA's Huron Lady cruise, or I'd be happy to buy you and your husband coffee sometime and learn all about it.   So far, I've got 3 rentals, but have been too chicken to get into flipping.  I'd love to hear any details you'd be willing to share, on BP or wherever.  That's very exciting.  Congrats, again.  

    0Reply
  • Karen O.
    NYC, NY · Member since 2016 · 617 posts · 456 votes
    10y

    That is so cute!!  Love the backsplash and the follow thru in the shower.  Smart and economical. Congratulations.   

    Question:  You said you paid $30K & put $7K into it for total in of $37K and you sold for $65K.  

    While I don't know your carrying and closing costs, that appears to be a return of $28K.  

    28K return on 37K invested is ROI of 75.6%.

    So unless I got it totally wrong and there were other expenses I didn't account for, a big WOO HOO! to you.  Well done.  

    0Reply
  • Rick Maningas
    Flipper · Milwaukee, WI · Member since 2016 · 66 posts · 12 votes
    10y

    First off, congratulations. That is wonderful news. 

    I wish Milwaukee had a zoning board to limit or monitor rentals. I deal with buy, rehab and sell owner occupant properties and there is nothing worse than seeing a neighborhood going down the tubes because of rentals. 

    When talking ROI I like to talk about gross ROI and annualised ROI. Gross ROI is just taking the net profit divided by your total investment. $25,000 net profit divided by $100,000 investment equals a gross ROI of 25%. This ROI does not take into account how long it took to earn your profit. If it took you six months, in theory you could then do two deals a year so your annualised ROI is now 50%, or $50,000 profit divided by the same $100,000 investment. If it took two years to make $25,000, your annualised ROI is reduced to 12.5%. Just a few extra thoughts based on some of the additional comments.

    1Reply
  • Cory Mccarthy
    Investor · Fenton, MI · Member since 2015 · 142 posts · 46 votes
    10y

    @Dante Pirouz, nice change of direction on the exit strategy.  House turned out great and you deserve the rewards you received.  Keep up the great work.

    0Reply
  • Dante Pirouz
    OP
    Investor · Almont, MI · Member since 2015 · 360 posts · 302 votes
    10y

    @Rick Maningas so if I'm understanding you correctly, we bought in October and sold in April so 6 months so that means 50K/40K = 125% annualized ROI?

    0Reply
  • Comfort S.
    Rental Property Investor · Atlanta, GA · Member since 2016 · 58 posts · 13 votes
    10y
    Dante Pirouz congrats!! I'm glad you were persistent and figured a way out!! Love it!
    0Reply
  • Dante Pirouz
    OP
    Investor · Almont, MI · Member since 2015 · 360 posts · 302 votes
    10y

    @Robert Spencer Yes I'm a member of PHALA and Mike Bodeis helped out a ton during the process. We would love to meet up with you to talk shop. I plan on attending an upcoming meeting so maybe we could meet then!!

    0Reply
  • Rob B.
    Prospect, KY · Member since 2016 · 3 posts · 0 votes
    10y
    Originally posted by @Dante Pirouz:

    @Rick Maningas so if I'm understanding you correctly, we bought in October and sold in April so 6 months so that means 50K/40K = 125% annualized ROI?

    I think it is more the total ROI divided by the amount of the year that it took. So for 6 months being half the year your annualized ROI would be roughly half of the total ROI.

    There is more math in there that i forget but i am pretty sure that is the basic idea.

    Edit: Actually i figured it up and I was dead wrong on what i said at first. Just on 37k invested and 65k sold the annualized is 213% so if you deduct your expenses you are still pretty high up there for annualized return.

    0Reply
  • David Cowan
    Investor · Twinsburg, OH · Member since 2014 · 111 posts · 41 votes
    10y

    WHOA!! That's amazing! congratulations!

    0Reply
  • Wes Brand
    Investor · San Francisco, CA · Member since 2016 · 314 posts · 153 votes
    10y
    Originally posted by @Karen O.:

    That is so cute!!  Love the backsplash and the follow thru in the shower.  Smart and economical. Congratulations.   

    Question:  You said you paid $30K & put $7K into it for total in of $37K and you sold for $65K.  

    While I don't know your carrying and closing costs, that appears to be a return of $28K.  

    28K return on 37K invested is ROI of 75.6%.

    So unless I got it totally wrong and there were other expenses I didn't account for, a big WOO HOO! to you.  Well done.  

    50% makes sense to me -- you left out buyer/seller agent commissions (6%+), and carrying costs for 6 months. 

    0Reply
  • Rick Maningas
    Flipper · Milwaukee, WI · Member since 2016 · 66 posts · 12 votes
    10y

    Is $50K the net profit and $40K the total investment for six months? If so the equation is $50K / $40K = 125% for six months, times 2 = 250% (annual ROI) for a total of a one year investment at the same rate of return on the same invested amount.

    0Reply
  • Courtney Merricks
    Investor · Fort Lauderdale, FL · Member since 2015 · 172 posts · 30 votes
    10y

    Looks good... Congratulations on your success. 

    0Reply
  • Rick Maningas
    Flipper · Milwaukee, WI · Member since 2016 · 66 posts · 12 votes
    10y

    If you really want to get specifIc and use a spreadsheet to determine the exact number of days for your investment, enter your purchase date in one cell, the closing date in another cell and in a third cell, subtract the two dates to determine the exact number of days you had your money invested. Now you can take net profit divided by total investment divided by the number of days for your investment times 365 (days in a year) times 100 (to give you a percentage) equals annual return on investment. 

    Example:  quick 90 day flips, $25,000 profit, $100k investment, done 4 times in one year

    $25k / $100k  = .25 / 90 = .002777 X 365 = 1.013 X 100 = 101.38% return

    0Reply
  • Sheila F.
    Investor · Statesville, NC · Member since 2015 · 113 posts · 58 votes
    10y
    Absolutely AWESOME. so in the words of my mentor, that was great, DO IT AGAIN!!!! Congratulations!!! Sheila
    0Reply
  • Paula McDonald
    Realtor · Tampa Bay, FL & Baltimore MD · Member since 2014 · 29 posts · 11 votes
    10y

    Congratulations!  Awesome work!

    0Reply
  • Karen O.
    NYC, NY · Member since 2016 · 617 posts · 456 votes
    10y

    I figured something was missing but she didn't mention either.  But I get you.  Still a nice project no matter how you cut it.

    0Reply
  • Sarah Lorenz
    Specialist · Ann Arbor, MI · Member since 2016 · 355 posts · 191 votes
    10y
    Nice work in a Plan B situation!
    0Reply
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