First Flip in Phoenix Arizona!

First Flip in Phoenix Arizona!

Flipper/Rehabber · Anthem, AZ · Member since 2015 · 23 posts · 33 votes

Hey BP!  I just wanted to share my experience on my first flip in Phoenix, AZ!  When I say this is my first flip, this isn't counting the previous live-in flips that I had previously done (which was fantastic for learning the whole process btw).  Anyway, here are the details -

Purchase Price $62K

Rehab (including holding costs) $43K

List Price $175K

Sale Price $174K

Net Profit (after all commissions, closing costs, etc) $59K

I had found this deal by doing my own direct mail marketing campaign, which took a few months to get the right deal.  I was very picky on this first one because I wanted a "slam dunk" for my first one, with very little risk of losing money.  Unfortunately, I probably passed up a couple of other deals because of this, but am definitely ready to take on more risky flips in the future. 

The house was a pretty standard flip - 1730 sq feet, 3 bed, 1.5 bath.  Needed all the usual cosmetic upgrades - kitchen, bathroom, flooring, paint, etc.  The only downside was that the house was built in the 1950's with an addition built in the 70's.  So this meant spending $ modernizing the place, including filling in a sunken wetbar in the main living room that was straight out of the 70's! 

The rehab took about 5 months from beginning to end, but I definitely was slowed by my "real job".  Probably should've only taken 2-3 months to finish.  I listed the house myself, through a flat list agent, and got a crazy response in the first weekend - 9 offers, with 7 over asking price!  I never imagined to have that good of a response, but apparently sub $200k houses in Central Phx are selling like hotcakes.  After inspection, we ended up renegotiating for the two 20 year-old air conditioning units on the house, which I was okay with.  I figured comps wouldn't come in much higher anyways, which was right on with my asking price (appraised at $175K).  Nailed it!

There were definitely a few things I did wrong which unfortunately cost me $, but I'll mark it up as"educational expenses".  This post is getting pretty long, so maybe I'll save those tips/lessons I learned for another day.   

Lastly, I want to give a huge shout out to the BP community!  For about a year, I lurked on these forums and listened to countless podcasts that really gave me the confidence to start this journey.  Thanks everyone!  Now it's time to find the next deal!

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Financial Advisor · Phoenix, AZ · Member since 2016 · 50 posts · 21 votes
9y

@Chris Eley Awesome job!  The after photos are gorgeous.  What area of Phoenix did you do this in?  Did you do all the physical repairs yourself? 

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  • Surveyor · Hemet, CA · Member since 2015 · 797 posts · 112 votes
    9y

    @Chris Eley I am starting to build my team of people that can fix things improve houses such as your basics. 

     What am I missing? I have contacts for plumbers roofers Electrcian contractor painter floor person.  I wanna get on a roll so I can kill this 1031 exchange!

  • Fort Lauderdale, FL · Member since 2013 · 7 posts · 0 votes
    9y

    43k seems a little high imo for the rehab for some reason. Maybe I'm tripping idk. Aside from the holding costs what was the total costs of the rehab alone?  Can u break down that part a little more?

    Because it sounds like you basically came in, cleared out the place did upgrades - kitchen, bathroom, flooring, paint, fillings.. ect but didn't hear you say you put on a new roof or had plumbing issues or any unexpected problems aside from cosmetic TLC for the most part. my wild estimate 9k bathroom? 8k kitchen? 5k flooring? 3k paint ? 8k fillings? How does it break down?

  • Conway, SC · Member since 2012 · 114 posts · 44 votes
    9y
    Chris Eley great job, amazing rehab from what you posted. What was your main strategy on building the list for mailings? Did you use a list source company? Please share. In my opinion laminate doesn't last as long as tile or vinyl planks, but you got it done. Good price for that market area that is off the chain in competition. I am jealous... wishing you more success.
  • Real Estate Agent · Mesa, AZ · Member since 2016 · 26 posts · 3 votes
    9y

    First is hard one! But you made it and you did a awesome job. 

    Congrats!!

  • Flipper/Rehabber · Anthem, AZ · Member since 2015 · 23 posts · 33 votes
    9y

    @Tony Wooldridge Thanks Tony!  I don't have the next one lined up quite yet, but the next mailing campaign starts tomorrow...1000 letters going out! 

    @Robert Burgess  Ha yeah the wetbar was pretty crazy!  I probably spent $2-3K total in marketing before finding that deal.  Of course that included things like setting up my website, business cards, and other initial marketing expenses.  I was pretty fortunate though that this deal came from my first round of mailings to this list. 

    @Robin Boyer Sounds like you're off to a great start!  Surrounding yourself with a great team is paramount! 

    @Michael H.  Yeah, there were definitely more fixes than what I had listed - the more expensive things included a new roof $7K, relocation of the laundry room inside $3K, plumbing leak in the main bath (cast iron piping was a pain) $1K, and removing the wood paneling and retexturing/re-drywalling a large portion of the house $2K.  Then $7K kitchen, $5K bathrooms, $6K floors, $4K paint/baseboards, and the rest was misc repairs and holding costs.

      @Susan Knight Thanks Susan!  I just built a list from ListSource for out-of-state absentee owners for specific zip codes in Phoenix.  I narrowed it down to an area that I knew was super hot and was relatively cheap to buy. 

  • Lyndhurst, NJ · Member since 2017 · 19 posts · 6 votes
    9y

    @Chris Eley........Awesome job and Congrats Chris!  I hear that the Phoenix area is doing very well.  I'm at the stage you were at earlier...getting as much education thru BP forums and webinars, as well as bootcamps and seminars from the pros.  Nothing beats the experience and I am ready to take the plunge - stories like yours are the inspiration.  All the best and keep the Faith - Mike

  • Real Estate Agent · Mesa, AZ · Member since 2017 · 7 posts · 2 votes
    9y

    @Chris Eley Great job and nice numbers! The before and after pictures are lovely. Good luck on your next deal. 

  • Lender · Tucson, AZ · Member since 2015 · 279 posts · 91 votes
    9y

    Good morning, @Chris Eley - great, inspiring story! There is a way for you to pull your cash out of an acquired property BEFORE you sell it so you can move on to acquiring the next property for a flip.  Let me know if I can provide you with more information. 

  • Real Estate Investor · Chandler, AZ · Member since 2009 · 111 posts · 114 votes
    9y

    @Chris Eley, great job on your flip! Rehab looks great and the numbers look even better. The direct mail response rate of 1-2% is actually pretty typical for direct mail and good for our competitive market. Sounds like you spent about $3,000 in marketing to get this deal, correct? And, as you said, that's with you being conservative, which is smart. That's an excellent ROI.

    As was stated, the first one is always the hardest.  I also love the laminate flooring look too.  You've taken a very smart path to finding your success.  I love seeing that.  Well done and good luck on the next one.  

  • Surveyor · Hemet, CA · Member since 2015 · 797 posts · 112 votes
    9y

    @Chris Eley I was ordering what would you suggest or advise someone going for the first buy-and-hold investment do you want to look at pre-foreclosure foreclosure or real estate owned? I would you go about finding the best deal the house that needs the most work.

  • Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes
    9y
    Great job!
  • Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    9y

    Looks great ... my only criticism is that I probably would've BRRRR'ed that one rather than taking the tax hit by cashing in the short term gains. Something to consider, but I understand that everyone has a different investment style and nobody ever went broke by taking a profit.

  • Investor · Bensalem, PA · Member since 2011 · 146 posts · 93 votes
    9y

    @Chris Eley  Hats off to both you and your wife.  That is some quality work you put in there, and solid numbers too.  Way to go!!!

  • Flipper/Rehabber · Anthem, AZ · Member since 2015 · 23 posts · 33 votes
    9y

    @David Faulkner Yeah, I definitely considered doing the BRRRR method, but it just didn't make sense for this particular property due to the 2 extremely old air conditioning units on the home (probably $9-10K in capex). It would definitely take a while to recoup those costs, considering the lower rent in the area. That, and I'd rather not rent a property with a brand new kitchen in it - just my personal preference.

  • Woodland Hills, CA · Member since 2016 · 98 posts · 40 votes
    9y
    Great job, Chris! I'm looking to the Phoenix area for BRRRs and would love to connect with you. I lived in Mesa and Gilbert in the East Valley for a while, but am not back in Los Angeles.
  • Contractor · Scottsdale, AZ · Member since 2015 · 49 posts · 11 votes
    9y

    This is a great example of doing solid investigation and due diligence to market/locate, rehab, and sell at a profit. Many can learn from this example, great Job Chris!

  • Tucson, AZ · Member since 2015 · 70 posts · 24 votes
    9y

    solid profit and nice job on that flip...came out super clean! are you purchasing your leads off of listsource? im down in tucson and about to start a marketing campaign as the MLS is crazy hot right now and people are paying way too much money for these run down properties.

  • Flipper/Rehabber · Anthem, AZ · Member since 2015 · 23 posts · 33 votes
    9y

    @Dan Voykin Thanks Dan!  I received your email as well, and will reach out soon. 

    @Adrian Watkins Yeah, I just used Listsource and tried out a few different lists before hitting on this one. It ended up being an out-of-state absentee owner with 100% equity - she had rented out the house for 7 or 8 years and was ready to get rid of it and use the cash for part of her retirement. And I agree, the MLS is very tough to find deals right now. I think the only way you can find deals on the MLS is to be a licensed agent, that way you can save the commissions and be able to quickly write up offers when deals come up. I'm actually planning on getting my license in the next couple of months, so we'll see if that helps with deal flow.

  • Real Estate Agent · Scottsdale, AZ · Member since 2016 · 53 posts · 10 votes
    9y

    Congratulations on your first flip!  First is always the hardest, but now that's under your belt - it'll give you more confidence to do bigger jobs and do more flips.


    Question - how were you able to purchase at that price of $62K?  Did you negotiate directly with the homeowners?

  • Flipper/Rehabber · Anthem, AZ · Member since 2015 · 23 posts · 33 votes
    9y

    @Dalton Kiley  Thanks!  Yeah, I definitely agree with the increase in confidence after the first flip.  It definitely changes your mindset - not IF I will be able to find a flip, but HOW am I going to find it.  And yes, I was able to negotiate the price directly with the seller over the phone since she lived out of state. 

  • Real Estate Agent · Scottsdale, AZ · Member since 2016 · 53 posts · 10 votes
    9y

    Absolutely, that is a good point.  I see - out of curiosity, was she trying to sell her home before she saw your mail & contacted you?  The wood floor looks killer in that home by the way.

  • Tucson, AZ · Member since 2015 · 70 posts · 24 votes
    9y

    @Chris Eley Thanks for the tip!!  I agree with the real estate license....I am trying to get my wife to get hers.  Would save so much money in the long run and keep the commission in house.

  • La Puente, CA · Member since 2016 · 102 posts · 21 votes
    9y

    Yes please share your marketing cost. What inspired you to use a yellow letter? Did you choose your own design or borrow from a template? Yellowletters.com? Thanks for sharing.

  • Flipper/Rehabber · Anthem, AZ · Member since 2015 · 23 posts · 33 votes
    9y

    @Michael M.  I actually was using typed letters with handwritten addresses on standard envelopes.  I just typed something up myself, so I didn't use a template or anything.  If you're not sure where to start, there are tons of examples of what you can write (on here and by Google searching).  I started out with postcards, but just found that the response was extremely low, although sending out postcards (through click2mail) were much cheaper and easier than letters.  I was spending roughly $0.60 per letter I sent out.  But thanks to @Matthew Rogers, I just found out you can buy forever stamps on Ebay at a discount, so that should cut the cost down a little bit.  Thanks again for the awesome tip Matthew!

  • La Puente, CA · Member since 2016 · 102 posts · 21 votes
    9y

    I found a few condos in Phoenix, off the MLS (where good deals go to die). I was thinking of doing my first flip with a relative who lives there, he doesn't have his GC license, but he does nice work. Have you ever flipped during the Arizona summer months and would you recommend against it? Maybe I should use a licensed contractor on certain things like the kitchen and bathroom, but I can use my non licensed relative for things like drywall, and flooring? I loved that flooring you picked out. Thanks again for sharing your story.

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