My First Fix and Flip

[Bryan Johnson]

Investment Info:

Single-family residence fix & flip investment in Byron.

Purchase price: $33,000
Cash invested: $42,000
Sale price: $127,500

My first fix and flip. Interesting property because there were major structural issues with the basement foundation. I obtained quotes for the work prior to making an offer and adjusted my offer in light of those bids. The rehab went very smoothly; I added a bedroom to make it a 3/2 and increased the property value greatly in the process. I sold for approximately a $40,000 profit. Really pleased with the result of my first flip.

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

Like many places, the market has been hot here for several months. Plus, it's not an area with a lot of renters. Thus, I had a pretty easy decision to flip.

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

I found the deal on MLS. I negotiated the foreclosure with the lender through my agent. I did considerable diligence pre-offer, obtained bids to account for the basement foundation issues, included those bids with my purchase offer, and secured the property at a steep discount as a result of that diligence.

How did you finance this deal?

I used a $20,000 private money loan, and used cash from savings to finance the remainder.

How did you add value to the deal?

Shored up the concrete foundation; cosmetic upgrades throughout entire main floor; new appliances; and added a third bedroom to appeal to a wider audience.

What was the outcome?

After all was said and done, I netted approximately $40,000.

Lessons learned? Challenges?

The key lesson I learned was that adding a bedroom does not cost a lot, but can provide great returns. I'll be looking at properties a little differently in the future to see when and where I can add a bedroom to quickly and efficiently increase value.