Lakeland, FL · Member since 2017 · 44 posts · 25 votes
9y
Amazing job @Cory Iannacone. So talk some number if you don't mind! it seems like a long hold time so did you make your desired profit? What are some of the lesson learned and mistakes you made? did you do any of the work yourself?
Investor · Harrisburg, PA · Member since 2016 · 126 posts · 377 votes
9y
@Ibrahim Elzaim Longer than I planned. I started December 1. So, basically 6 months. It should have been done in 2 months. I ended up having to fire my contractor and get someone new to complete the work. It was a great learning experience and ended up getting hooked up with a great contractor at the end.
Lakeland, FL · Member since 2017 · 44 posts · 25 votes
9y
Amazing job @Cory Iannacone. So talk some number if you don't mind! it seems like a long hold time so did you make your desired profit? What are some of the lesson learned and mistakes you made? did you do any of the work yourself?
Rental Property Investor · Springfield, VA · Member since 2013 · 56 posts · 16 votes
9y
Cory Iannacone Awesome flip! How did you come up with the design? Did the contractor come with it all? I'm doing a flip and wondering how it should be designed to get max profit.
Investor · Harrisburg, PA · Member since 2016 · 126 posts · 377 votes
9y
Thanks @Anthony D. In short, here are the numbers, which require some explaining:
Purchase Price: $125,000.
Repair Costs: $70,000. (includes both labor and material. I did not do the work myself. The house is located in Catonsville, MD (which is the suburbs of Baltimore). I live about an hour and a half away in Harrisburg, PA.
ARV: $265,000 - $275,000
Holding costs: $0. See explanation below.
Rentals in the Catonsville, MD area: $1650 - $1850. (I would put this house at the higher end.)
Taxes: $172/month or $2,062/yr.
Now, here's the backstory. The house was actually my grandfather's who passed away in October 2015. My mother had been sitting on it for over a year, paying taxes, utilities, etc. which is when I offered to purchase it from her. This is where it gets complicated. We had an agreement (see numbers above) and I moved forward with purchasing materials, hiring contractors, etc. This is when my sister, who lives in Florida expressed interest in the house. My mother wanted to keep the house in her name (in case my sister moved back to MD from FL), but move forward with the rehab.
Lesson #1: Be very careful in mixing family and business. I honestly believe the family trumps business, so I would never do anything to jeopardize my relationship with my family.
This is where the deal changed. My end goal was cash flow which could be used towards another purchase. The house was paid off and my mother wanted to keep it in her name, but did not want to continue paying expenses every month for the house. Therefore, the new arrangement was that I would handle fixing the house up. I would then rent it out, pay the expenses, and be paid with the profits from the rent--essentially I would be managing the property.
I asked my mother to put up the cash to pay the contractors as an investment into the property. I put all the materials on a Home Depot credit card with no interest for 24 months. My mother benefited 2 ways: #1 - increased equity in the house she owned from the rehab, and #2 - she would no longer have to worry about covering expenses on the house. I plan on getting a HELOC once my 24 months of no interest runs out on the HD credit card and pay the monthly payments from the rent proceeds. Everyone's needs were being met.
Lesson #2: Be flexible in dealing with sellers to make a deal work. See what the seller needs, and see what you can do to accommodate the seller's needs and your needs at the same time.
Session #3: I should have done a better job screening my contractor. Honestly, things, started out great, but I noticed small things which should have been red flags. Work not getting done. Contractor not at the house when he said he was. I continued to give the guy chances--too many. That's really what delayed the project.
Lesson #4: Listen to your gut when something doesn't seem right. I would notice work was not done properly. The contractor really screwed up the floors, but kept telling me that's just the way they were supposed to look. I had my new contractor redo them and it looked a million times better.
Investor · Harrisburg, PA · Member since 2016 · 126 posts · 377 votes
9y
@Robert Gunby Thanks! I did all the design myself. I did move things around in the kitchen--sink to a window, opening up the wall to the dining room, and moving the frig location. I just went with my gut based on many other kitchens I have seen. As far as materials go, I believe grays and whites are very popular. I spend about a month shopping materials to find the best value I could.
Lakeland, FL · Member since 2017 · 44 posts · 25 votes
9y
Hey, good story and there is always a lesson to learn when doing a rebah or flip it seems. Great job with the house though and good luck on the next adventure!!
Investor · Schaumburg, IL · Member since 2015 · 219 posts · 104 votes
9y
@Cory Iannacone
Awesome job! the house looks like you ripped some stock photos from a magazine
FYI. Can't beleive you put Silestone-Quartz countertops in a Rental. Thats a pretty big chunk of change to drop on countertops. Next time I would like to suggest considering a no name quartz brand, of course it would not be from Spain like Silestone. You can easily save 30-60%. Nonetheless, the house is amazing. I feel sorry for the comps in your neighborhood.
Rental Property Investor · Walla Walla, WA · Member since 2016 · 480 posts · 346 votes
9y
@Cory Iannacone, what more is there to say other than WOW! GR8 job. Looks like you turned the ugliest house on the block into one of the most beautiful, AWESOME! I just started demo on my 1st rehab last weekend and am looking forward to sharing my story as well here in awhile after its completion. Couple of quick questions if you don't mind(?) What would you say is the best and most beneficial take away from this project? What was the worst part that you will never do again and or will try to avoid doing again in the future. Thanks for allowing me to share as well as learn from your experience. Keep up the good work, and here is to wishing you a successful 2017 in your REI ventures!
Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
9y
Nice job!
So did you purchase it for $125k or not?
Sounds like it was your moms and it stayed your moms. Just curious where that number came from.
Are you going to rent it or sell it?
It looks like a perfect fix and flip. If renting it is the plan I'd be a little worried about the wear and tear. We are at the peak of the market so if you were ever going to get top dollar it would be now. Kind of like driving a new car off the lot you may see depreciation on all your brand new high end finishes as time passes. Great looking home non the less and it looks like you'll make money one way or another.
It looks beautiful! I love how you moved the plumbing in the kitchen, makes it way more function and a nice flow!
Just a tip with pictures, I always open the blinds to get the most natural light possible, it's so pretty when the floors like glow! Overall excellent job! Can't wait to see your next one!
CAD Drafter · Ames, IA · Member since 2015 · 9 posts · 2 votes
9y
@Cory Iannacone What a terrific job! Great numbers!! Did you have any other issues with your 1st contractor? Thank you for sharing the stats of your project!
Rental Property Investor · Charleston, WV · Member since 2013 · 262 posts · 109 votes
9y
Great Job! I love the floors and the gray/white color scheme. Are recessed lighting hard to install? They look amazing. Looks very modern, bright, and popping.