Investment Info:

Single-family residence fix & flip investment.

Purchase price: $210,000
Cash invested: $40,000

Fix and Flip #14. Purchased off market and direct from seller. This was a referral from a previous client that sold us her home. It took a lot of appointments with the seller and building trust for her to sign with us. Seller lived in the home for 40 years. Great location and the main floor bathroom was already remodeled. We were able to complete the project quickly in about 6 weeks, and it sold to the first person that walked through with a closing date coming up of 5/29/2020.

What made you interested in investing in this type of deal?

The house was generally in great shape, but needed a new kitchen, paint, light fixtures, and a large list of required repairs from the City of St. Louis Park, MN.

How did you find this deal and how did you negotiate it?

This deal came to us a referral from a previous client that sold us her home. Negotiations were tough as seller was considering doing the work herself and listing the property. We were honest and transparent about what the costs would be for her to do the work, and it took multiple appointments and meeting her son-in-law to build enough rapport.

How did you finance this deal?

We used our new facility line of credit at our bank. They funded 75% of the deal with a 1% loan origination fee and low interest only payments. We kicked in 25% down and paid for the rehab work.

How did you add value to the deal?

New kitchen/appliances/kitchen floor, fresh paint throughout, ceiling and trim work repairs, replaced galvanized plumbing, new hot water heater, new garage door opener, new carpet, new interior door handles, hardwood floors buff and coated, and various city required repairs.

What was the outcome?

We were worried with the COVID issue coming to a peak mid way through rehab. Would there be buyers? We banked on providing a nice finished product at first time homebuyer pricing for the area. First available showing time was 2PM the day it listed, and an agent showed it at 2:15PM and had a full priced offer to us within a few hours.

Lessons learned? Challenges?

There were some bottlenecks in the rehab, one being the cleanout phase. Took a lot longer than expected and will probably hire a company to handle this in the future. Other bottlenecks included cabinet design/finalization and electrical permits due to COVID.