Real Numbers - Flip Sold in FL! Before & Afters & lessons

[Arianne L.]

Hi All,

Thank you everyone for providing such amazing content on biggerpockets. Here's hoping that my post can help others in some way. 

This is a property we bought off auction in Fort Walton Beach, FL. From purchase closing to sale closing was 6 months and a couple of days.

Purchase price was funded by a private lender and the renovations were funded by our company

Purchase price + closing costs: 127,770

Sold price: $272,500

Renovations: $52,000

Holding costs: 3,200

Closing costs: 6.370

Seller credit: 6,500

Realtor fees: 13,625  (I actually listed this myself since I'm licensed and didn't take commission. But I'm putting the full commission numbers here since I did work for the listing side and somebody else would have paid for that) 

Cost of money: 9,200 

Project Profit = $53,835 

Now, the project profit doesn't include our business overhead like what I pay my project manager who manages our contractors, my assistant, the company's capital cost, etc. All of those were required to make this possible.

Lessons learned: 

Windows are expensive.

Never fall for contractor sob stories. We had to fire a set of subs for this one and we fired them 3 weeks late. They made up all sorts of excuses for three weeks and it lost us precious time and money. They also stole a few thousand dollars worth of materials when they finally got fired, claiming that the materials were stolen from them. But we all know better.

Related to the previous lesson. Winter season is slow in our market. This project could've sold before the end of 2016 if we had gotten it finished sooner. Instead, we listed right around thanksgiving when buying activity significantly decreased. That's several thousand dollars in holding costs and money costs.

There are good realtors out there. The buyer's agent on this one really helped put this deal together and helped guide their picky/panicky first time home buyers.

This was the first project our project manager took on when we hired him. It was enlightening. It was great having someone else managing the contractors so I could focus on building the business.

Our private lender made a great return and is still investing with us after this project! 

Here are some before and afters. Thank you for reading! 

[Rocky V.]

Wow!!  Very nice and a solid return.  Interior looks amazing with very neutral colors.  Just not sure about that exterior accent color.

[Patrick O.]

Wow. Looks really great. I love how the light gray makes the white trim and fixtures really pop. Are the floors wood look ceramics?

[Arianne L.]

@Rocky V. Thank you! We painted the exterior accent white instead of the orange. If we had a meatier budget we could've painted the entire brick exterior a neutral color. 

@Patrick O. Thanks! Yes, the floors are wood look ceramic tile. Got a good price at a local supplier for $1/sqft. I think they usually retail at lowe's for 2/sqft Excuse the grout haze in the pictures. Cleaners weren't quite done cleaning when the photographer got there. 

[Patrick O.]

They're a perfect offset to the gray. Especially at $1 a sq.

[Chris Lemire]

@Patrick O. Yep, we thought it turned out very nice. Check out your local surplus warehouses. They often have some nice things in stock.

The downside is, they only have a finite number, and roughly 5-10% of what we bought was cracked/chipped. Some of that will still be usable for cuts, but you should pad in some extra waste.

We actually bought all they had (6 pallets) of this tile and had enough for 2 of our properties.

[Khaled Helmi]

Congrats @Arianne L. - great first project!

Our first project was also an auction property, i'm curious about what type of auction did you attend?  Was it an online or courthouse-steps/sheriff auction?  Did you get to see the property before-hand?

[Thokozani Mpanza]

very nice.

[Account Closed]

Looks good guys thanks for sharing.

[Arianne L.]

@Khaled Helmi Thank you! This was actually our 4th flip project. We've gotten a little better from the other ones but there are always new lessons to be learned!

This was an online auction on homesearch.com I think they're now xome.com. I was able to see the property beforehand. I haven't bought off the sheriff's auction yet. Did you buy yours from the courthouse-steps/sheriff auction?

[Chinmay J.]

@Arianne L. - First of all congrats. It looks great. Great profit too.  So was the auction at the footsteps of the courthouse or on the auction sites? What homework did you do prior to bidding on the property? Did you run a title search?

[Khaled Helmi]

@Arianne L. - Yeah both of our flips (our first and our current) have been through courthouse auctions.

The advantage to them is that its a limited crowd unlike the online auction sites, so you can get some deals (we had around a 100k profit on our first deal) but the disadvantages are (1) most auctions are fruitless so you waste a lot of time going for nothing, and (2) you dont get to see inside the property before the auction - so there can be some ugly surprises.

Depending on your market and the competitiveness it may or may not be your cup of tea

[Arianne L.]

@Chinmay J. Thank you! It was on an online auction site called homesearch.com I think it's called xome.com now. It was actually a pretty straightforward process like a normal REO. So just the normal title search through our title company and did our typical inspections. We received a special warranty deed.

@Khaled Helmi Wow that's awesome! Congratulations! I have been looking into bidding on courthouse auctions but haven't ironed out the process out. 

What is your process like? 

From the information I've gathered in my county, you typically want to run a title search before you bid (2-3 days prior?) then you need a deposit (here it's 5% of purchase price) deposited at the courthouse 1 day prior to bidding. On auction, day, you bid at 11am, if you win, you fund the entire purchase price by 4pm. Then, you get a certificate of sale from the county. Does the title company have to do something special so you can transfer a warranty deed to the end buyer?

Is your process generally the same? 

Have you ever had to evict an occupant or offer them cash for keys? 

Thanks! :)

[Zach Westerfield]

Looks great! Thanks for sharing this info!

[Tim Hall]

Congrats and thanks for sharing. A lot of people coming in to the business do not consider all of the costs to do a flip. The more times we share the more we can educate, the more time someone is less likely to get themselves into situation where they lose money. That's good for everyone!

[Matthew Hipp]

Congrats on your success!  Can you share some more info on your project manager's setup and how you paid him?  Was his pay based on the a percentage of the profits or did you have another agreement in place with him?  

[Arianne L.]

@Thokozani Mpanza @Account Closed We pay our PM a base monthly salary + flat fee bonus per each project completed on time and on budget. Moving forward, we would like to pay him purely off % of profits with no base in order to align our interests better. 

Right now he needs the consistency of a base salary but once we scale and have rehabs going consistently we should be able to transition to % of profits. I'm looking at changing the flat fee bonus to a % of profit in the near future to help with the transition.

[Remy Gabriel]

Your story is both educational and inspiring. I'm currently living in Philadelphia but I will be relocating to South Florida soon so I am glad for the insight.  

Great job on the home, it looks beautiful!

Thanx very much for sharing Arianne!

[Rudy Brown]

Absolutely gorgeous! 

[Dimitri Lopez]

@Arianne L.

This is more exciting than Income Properties, the TV show! Thank you so much. Another one to show my darling. What an amazing job!

[Arianne L.]

@Remy Gabriel Thank you! There are plenty of good wholesalers in the South FL market so definitely look for them at the reias.

@Rudy Brown Thank you!

@Dimitri Lopez Thank you! We should probably hire a designer like they do on the show :). 

[Benny Villanueva]

Hello Arianne,

Wow ang ganda!

Congrats on the flip and it looks amazing!

I'm sort of new to REI but well on my way. I was curious to know how much did you pay your project manager? Some people are saying 10-15% of the rehab/project but not entirely sure.

Would you mind swaying my in the right direction on what is a good paying price. Looking to do an out of state flip/rental. From Bay Area here.

Hope all is well.

Best,