2nd Utah flip - profited $22k!

2nd Utah flip - profited $22k!

Investor · Layton, UT · Member since 2016 · 162 posts · 237 votes

Another one bites the dust! We closed yesterday and have officially sold off our 2nd baby, aka our 2nd flip. This project wasn’t nearly as extensive as our 1st, but it was very fulfilling and still learned a ton. This property was purchased through Auction.com and is located in Roy, UT. If you’ve never been the winning bidder on their site but are interested in the process, leave a note and I can tell you about my experience.

We closed on this property 10/7/16 but didn’t begin work immediately because my contractor was working on another project. Once we began, it was about 2 months of work, which is excessive for the amount of work that was done, so I’m not happy about that, but I’ll share why it went longer in my lessons learned section below. I borrowed funds from a private investor to fund this purchase. They covered about $85% of the required cash (repairs and actual purchase), and I covered the remaining 15%. Here are the numbers for this project:

Purchase Price: $140,999

Purchase closing costs: $1,706

Materials and Labor: $31,822

Holding Costs: $9,019 (includes repayment to investor)

Final Sales Price: $220,000

Closing Costs, Commissions, and Staging: $14,667

Total Profit: $21,788

Here are some before and after pictures:

Fireplace before/after:

Kitchen before/after:

These are the major items we replaced/redid on this house: converted the carport into an additional one car garage (not as hard as I thought it’d be), carpet, updated fireplace, paint, updated lighting, appliances, laminate, granite countertops (also added a little shelf to the counter so you sit at a stool to eat), backsplash, painted cabinets, new furnace, new windows, and removed 3 dead trees from the yard. This house already was 6 bed 2 bath, so it had great bones, just cosmetically it was fugly. My wife pretty much managed this project from beginning to end and did a great job. We only had it listed for a week before we received an offer $4k less than our listing price (but $5k more than I had always forecasted, if that makes sense), so we accepted and closed 4 weeks later.

What did I learn this time?

Lesson Learned #4 (to add to my previous post):

Too many cooks in the kitchen. We wanted to help out a neighbor and give him a chance to earn some side income on this flip. We laid out 3 items that he could do and then we would pay him once the job was completed (he wanted to be paid per hour and I didn’t agree). My general contractor advised us NOT to bring anyone else into the rehab, but we still went ahead with our decision. This decision probably single-handedly cost us ~3 weeks of repair time as he kept promising us he’d get his part done. Well, he didn’t, and so we had to call an electrician to tie a couple of loose-ends at the very end so that we could list the house. Lesson: Be wary of hiring friends, family, or neighbors.

We just started our 3rd flip in Ogden this past Monday. It was an MLS purchase. It's only 1000 sq ft so we should be re-listing it within a month.

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Real Estate Agent · PA · Member since 2017 · 63 posts · 28 votes
9y

Hey Caleb! Thanks for your input.  I am just a beginner and haven't actually done any flips yet but am a serious contender.  How is it using Auction.com?  I thank you for your response!

See this reply in the discussion

106 Replies

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  • Real Estate Investor · Chantilly, VA · Member since 2016 · 15 posts · 1 vote
    9y

    Thanks for sharing your success story! 

  • Pittsburgh, PA · Member since 2016 · 2 posts · 2 votes
    9y

    Beautiful job Caleb...congrats!  Question re auction.com:  are you concerned that a property you bid on/win has existing liens?  Do you do a title search BEFORE bidding?  Thank you!

  • Orem, UT · Member since 2017 · 10 posts · 2 votes
    9y

    I am amazed by your work!  We are newbies to all of this and am so fascinated by success stories like yours!  It inspires me and makes me excited and anxious to get to our first project.  How long did you educate yourself before you decided to dive in?

  • Investor · Litchfield, CT · Member since 2014 · 1 post · 1 vote
    9y

    Hi Caleb, 

    Congratulations on your flip and nice job. I am assuming you paid 6% in commissions or 13.2K and 1K to close leaving very little ($467.00)  left for "staging".  Is that about right? What items were used to stage for that amount and how long were the items in the house? In a 6 bedroom house, did you stage the master? Did you have an open house? Many thanks!

  • Magna, UT · Member since 2016 · 7 posts · 1 vote
    9y
    Originally posted by @Caleb Rigby:

    Another one bites the dust! We closed yesterday and have officially sold off our 2nd baby, aka our 2nd flip. This project wasn’t nearly as extensive as our 1st, but it was very fulfilling and still learned a ton. This property was purchased through Auction.com and is located in Roy, UT. If you’ve never been the winning bidder on their site but are interested in the process, leave a note and I can tell you about my experience.

    We closed on this property 10/7/16 but didn’t begin work immediately because my contractor was working on another project. Once we began, it was about 2 months of work, which is excessive for the amount of work that was done, so I’m not happy about that, but I’ll share why it went longer in my lessons learned section below. I borrowed funds from a private investor to fund this purchase. They covered about $85% of the required cash (repairs and actual purchase), and I covered the remaining 15%. Here are the numbers for this project:

    Purchase Price: $140,999

    Purchase closing costs: $1,706

    Materials and Labor: $31,822

    Holding Costs: $9,019 (includes repayment to investor)

    Final Sales Price: $220,000

    Closing Costs, Commissions, and Staging: $14,667

    Total Profit: $21,788

    Here are some before and after pictures:

    Fireplace before/after:

    Kitchen before/after:

    These are the major items we replaced/redid on this house: converted the carport into an additional one car garage (not as hard as I thought it’d be), carpet, updated fireplace, paint, updated lighting, appliances, laminate, granite countertops (also added a little shelf to the counter so you sit at a stool to eat), backsplash, painted cabinets, new furnace, new windows, and removed 3 dead trees from the yard. This house already was 6 bed 2 bath, so it had great bones, just cosmetically it was fugly. My wife pretty much managed this project from beginning to end and did a great job. We only had it listed for a week before we received an offer $4k less than our listing price (but $5k more than I had always forecasted, if that makes sense), so we accepted and closed 4 weeks later.

    What did I learn this time?

    Lesson Learned #4 (to add to my previous post):

    Too many cooks in the kitchen. We wanted to help out a neighbor and give him a chance to earn some side income on this flip. We laid out 3 items that he could do and then we would pay him once the job was completed (he wanted to be paid per hour and I didn’t agree). My general contractor advised us NOT to bring anyone else into the rehab, but we still went ahead with our decision. This decision probably single-handedly cost us ~3 weeks of repair time as he kept promising us he’d get his part done. Well, he didn’t, and so we had to call an electrician to tie a couple of loose-ends at the very end so that we could list the house. Lesson: Be wary of hiring friends, family, or neighbors.

    We just started our 3rd flip in Ogden this past Monday. It was an MLS purchase. It's only 1000 sq ft so we should be re-listing it within a month.

     Caleb... Congrats on your success so far and here's wishing you continued success. Do you do any flips in salt lake county? I'd love to add you to my buyers list of you do! 

  • Ray DipasupilPro Member
    Investor · Los Angeles, CA · Member since 2016 · 149 posts · 51 votes
    9y

    Fantastic work @Caleb Rigby. How much living sqft & lot sqft are in this 2nd flip?

  • Rockville, MD · Member since 2016 · 1 post · 1 vote
    9y

    inspiring! Thank you for posting the details. Sometimes it is hard to wrap my head around all of the extra costs! How much of that total was staging?

  • Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
    9y

    I am surprised you can get that much more at market price. In this area auction dot com homes often are over priced or higher than market because of strong demand and buyer use their own money.....

    Congratulations.

  • Temple, TX · Member since 2016 · 22 posts · 10 votes
    9y

    You and your wife did a great job on the flip! Congrats!

  • Hanford, CA · Member since 2017 · 10 posts · 3 votes
    9y
    Awesome job!
  • Investor · Layton, UT · Member since 2016 · 162 posts · 237 votes
    9y

    @Danielle Knight, I would read Brandon Turner's book on investing with no and low money down. That will get your brain working and you'll start to realize there are many ways to get creative with financing.

    @Hugues Armand-Delille, nope, just personal preference. The house was built in 1957, so we were trying to go for a more modern look throughout the house and we didn't care for the old stone on the fireplace. 

    @Garrett Minter, I think it depends on the area. In Utah, there aren't that many auction properties online at any one time, but I'm sure in higher foreclosure states (IL, PA, NJ), you could have some luck. Sort of like the MLS, you have to dig deep to find the real deals.

    @Rochelle Ray, I absolutely go and look at each property that I bid on, but I can also do that because I have a fairly narrow area that I'm interested in. I like to peek in the windows, knock on the neighbors door to see what kind of neighbors the previous owners were, and look for an old MLS listing of the house if I can find one. Sometimes Auction.com doesn't put the basement sq ft on the listing, so if you know it has a full basement then you could offer more money as the ARV will be that much higher.

  • Investor · Layton, UT · Member since 2016 · 162 posts · 237 votes
    9y

    @Kad Favorite, yes. I always do a preliminary lien search on each property. I have a local title guy that doesn't charge me anything because I've committed to bring him all of my title business.

    Hi @Mikki Rogers, I probably did 4 solid months of research before I jumped in the deep end. I listened to pretty much every BP Podcast that had anything to do with flipping. I also attended some of the local REIAs and got introduced to some wholesalers and other flippers. Also, J Scott's book on flipping houses is pretty awesome. 

  • Investor · Layton, UT · Member since 2016 · 162 posts · 237 votes
    9y

    @Heidi Fagan, so our Realtor only charges 1% to list our properties so ended up paying a total of 4% in commissions, plus we conceded some dollars towards the buyers closing costs. The staging cost about $1,500 which included the labor, the bedspreads, some artwork, some towels for the bathroom/kitchen. My tip for staging a bedroom: Buy blowup mattresses and put them on totes. No one will know that it's not a real bed frame and mattress and it's a million times easier to deflate those and pack them up in the totes rather than moving a huge mattress out in the end. 

  • Investor · Layton, UT · Member since 2016 · 162 posts · 237 votes
    9y

    @Eldon Gomez, add me! I haven't purchased a property in SLC yet, but I'm not opposed to it. Thanks.

    @Ray Dipasupil, this house was ~2,600 sq ft. I think the lot was just over .35 acres.

    @Sam Shueh, I know what you're saying. The really good deals on Auction.com don't show up very often, but when they do, they can be awesome ones.

  • Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
    9y

    How did the first flip turn out? 

    Here in Silicon Valley some of the recent flips will gain only what you gained. Very thin margin, Almost no margin for error. A coworker got into flipping business went in with contractor. Frustrated and tire of arguing. The return was not that attractive if one does not hold a year or so.

  • Ashley WilsonPro Member
    Rental Property Investor · Radnor, PA · Member since 2015 · 178 posts · 125 votes
    9y

    Great post, and thank you for the information on auction.com. I have noticed more and more properties are selling this way, so it's time to rev up the knowledge on how this whole process works.  I have a question regarding painting your cabinets.  Did you paint them yourselves, or hire someone? Also, did they hand paint them or spray them? We previously got bids for painting cabinets and found them to be as much if not more than just replacing the cabinets?  It might just be the bids we received, but I am interested in doing this on a future property, so I wanted to get your insight. Congrats again!

  • Montréal, Québec · Member since 2016 · 3 posts · 2 votes
    9y

    Thanks for sharing your learning lessons!

  • Real Estate Agent · Sicklerville, NJ · Member since 2013 · 65 posts · 11 votes
    9y

    Well done @Caleb Rigby,  this post brings a better picture on flips.  Thanks

  • Investor · Ann Arbor, MI · Member since 2014 · 45 posts · 29 votes
    9y

    Strong work here, Caleb.  Question for you:  As pertains to your private money loan of 85%, how did you end up compensating the lender?  Was it a % of the profit, or simply an interest payment of some kind (points) on the loan?

  • Real Estate Broker · Charlotte, NC · Member since 2016 · 569 posts · 351 votes
    9y

    Hi, Mr. Caleb Rigby Congratulations you have done good and hope for more flip success to come..

  • Phoenix, AZ · Member since 2016 · 3 posts · 3 votes
    9y

    Great job on the flip and info on auction.com. I've always been curious about using that site, and have wondered about the unpaid balance + fees (see below). Are you responsible for the unpaid balance?

    Est Opening Bid:$110,000

    Total Est Debt

    (Unpaid Balance + Fees): $179,200

    Thanks,

    Phil from Arizona

  • Seville, OH · Member since 2016 · 30 posts · 6 votes
    9y

    @Caleb Rigby One question. Is your net number you gave us pre or post tax? Also how are you paying your income tax on these flips? I'm looking to start flipping but keep hearing from people that since self employment tax is so high it cuts a huge part of your profit out. Just curious to see how it works for the successful flippers like yourself. 

  • James MasottiPro Member
    Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
    9y
    Originally posted by @Jerad Miller:

    @Caleb Rigby One question. Is your net number you gave us pre or post tax? Also how are you paying your income tax on these flips? I'm looking to start flipping but keep hearing from people that since self employment tax is so high it cuts a huge part of your profit out. Just curious to see how it works for the successful flippers like yourself. 

     I was just asking this same question in this thread and got a solid answer from @Brandon Hall that you can also apparently search around for on the Bigger Pockets blogs, something I haven't actually had the chance to do yet since I trust Brandon's response.

  • Philadelphia, PA · Member since 2016 · 7 posts · 3 votes
    9y
    Originally posted by @Sam Shueh:

    How did the first flip turn out? 

     Sam, you can find more information about the first flip in @Caleb Rigby's blog post here: My first flip

  • Investor · Kansas City, MO · Member since 2013 · 465 posts · 170 votes
    9y

    Where did you get the carpet in front of the fire place?
    The finished product looks amazing!

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