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

    Yes, I've flipped during the summer months, it's not a huge deal.  You'll definitely spend more on AC with guys coming in and out of the house, but it always seems like contractors were a little slower in summer so it worked out pretty well.  Whatever you aren't comfortable having your relative fix, I would hire out a contractor for.  Of course, the more work your relative does, the more $ you will save. 

  • Investor / Vendor · San Diego, CA · Member since 2016 · 1k+ posts · 949 votes
    9y

    @Michael M. and @Chris Eley

    Were you spending 0.60 a letter doing all the work yourself? I know of full fulfillment (print, pack, mail)  that costs 65 cents per yellow-letter.

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

    @Ray Lai  Yeah, I was doing it all myself - which I definitely would like to outsource.  Yeah, if you have a reputable company that can do this for $0.65 per letter, I'm in!  Please post or PM me the company contact info.  Thanks Ray!

  • Real Estate Agent · Sonoma, CA · Member since 2016 · 46 posts · 17 votes
    9y

    @Chris Eley Congratulations Chris! Thanks for sharing the story!  My husband and I are on our first flip and going well so far in Tucson.  Just rented one of the flipped units for $1010 (after purchasing the pre-flip property renting at $600).  Quick question if you don't mind.. you mentioned listing the finished flip "through a flat list agent."  What does this mean?

    Thanks again for sharing the success and great job!

  • Investor · Tempe, AZ · Member since 2017 · 61 posts · 36 votes
    9y

    @Michael M. When I send mailers for my business I use a normal 8.5x11 sheet of paper folded into a Z. In addition to this, I always place a business card in the middle of the folded paper. So now when they pull out the page my card falls to the ground. My thinking is they will throw away the flyer 99 out of a 100 times but may keep the card as it's smaller and still has all my contact information. I buy 5-10k business cards at a time and the cost is less than 1 cent each. 

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

    That's good thinking. It early morning and I'm not bashful about asking questions, please excuse my exuberance. Are you mass mailing to zip codes, or targeting expired, FSBO, NOD, rentals and out of state owners? Sourcing from list source? A-D class neighborhoods? Are you answering your own phones and negotiating? Do you personally meet with the seller or use an intermediary? Offering terms, subject too, or cash for keys? And lastly are you building cash with flips or buying and holding for long-term cash flow? Oh and how difficult or lengthy a process is to get a permit, if necessary, to remove a saguaro? Your patience is appreciated, my family members in AZ can't answer these things as they know what I'm talking about.

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

    @Kristie Eddy Thanks Kristie! I just pay an agent a flat fee of $199 that will get the house on the AZ MLS. This doesn't include anything else though - so I have to negotiate with the buyer's agent, do the paperwork, put the signpost/sign up, etc. You can also pay an additional $500 or so to have the agent's help with negotiating and paperwork (you still would have to take pics and write up the property description), but I decline this option since I am pretty comfortable with the whole process now. Here's the company's website I use - http://www.flatlist.com. 

  • Real Estate Agent · Sonoma, CA · Member since 2016 · 46 posts · 17 votes
    9y

    @Chris Eley This is so helpful! Thank you for taking the time. To further clarify, are you able to negotiate and do the paperwork without being a licensed agent?  I may be a candidate for the additional $500 but what a savings on the commission at a standard rate!  Thank you for including the website as well! SO helpful, really appreciate it.

  • Boca Raton, FL · Member since 2016 · 145 posts · 67 votes
    9y

    @Kristie Eddy: regarding @Chris Eley comment. I am assuming that he is negotiating his own properties. owners (sellers) don't need a license to sell their own properties.

  • Real Estate Agent · Sonoma, CA · Member since 2016 · 46 posts · 17 votes
    9y

    @Jorge Zea Thank you, I had forgotten that!  That makes much more sense!  We have only purchased at this point, still big learning curve on the sell side. :)

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

    @Michael M. I'm targeting absentee owners in specific zip codes, I'd say they are C to D neighborhoods. Yes, I have a Google voice number setup and answer my own calls and do the direct negotiating with sellers. I plan on building cash with flips until the market comes back down, then will look for buy and holds (unless I can find properties now that cash flow - then I would use the BRRRR strategy). Not sure about the Saguaro, you probably want to call a removal company to find out.

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

    @Chris Eley I cannot wait to go for my first flip! I am reading on how to add value to homes and I read last night curb appeal sometimes plays a bigger role than what is inside not sure how true that is. I wanna do leaf gaurds on the gutters possibly smart door bell with camera smart thermostat want my houses to be nice when they go to sell!

  • La Puente, CA · Member since 2016 · 102 posts · 21 votes
    9y
    Originally posted by @Chris Eley:

    @Michael M. I'm targeting absentee owners in specific zip codes, I'd say they are C to D neighborhoods. Yes, I have a Google voice number setup and answer my own calls and do the direct negotiating with sellers. I plan on building cash with flips until the market comes back down, then will look for buy and holds (unless I can find properties now that cash flow - then I would use the BRRRR strategy). Not sure about the Saguaro, you probably want to call a removal company to find out.

     Nice. Your accounting skills must come in handy when estimating the rehab. Very inspiring.

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

    Yeah they sure do!  Unfortunately, I can easily go into paralysis by analysis because of those same skills!  Haha

  • Specialist · USA · Member since 2016 · 226 posts · 51 votes
    8y

    @Chris Eley well done! what part of phoenix is this located?

  • Rental Property Investor · Somerville, MA · Member since 2011 · 101 posts · 19 votes
    8y

    @Chris Eley Great job on the flip. I don't have any question/comments, just wanted that thank you for being so open with the financials.

    Much success for the future!

  • Sierra Vista, AZ · Member since 2017 · 11 posts · 4 votes
    7y

    Chris,

    We also just finished up our first flip in AZ. Unfortunately, we found out about an obscure rule that says if you complete more than $1000 of repairs in labor/materials outside of work done by a licensed contractor, you have to wait a full year before you can sell or rent it. It was not fun to learn that and completely ruined our plans. We're not sure how we're going to make a profit flipping in AZ if we have to use expensive GC's. The law is called the Handyman Law. As a flipper, have you come across this at all? Or could you explain this further to us?  We're not trying to get you in trouble here, we just got really upset learning about this ourselves recently.

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