My first flip

Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes

I’m under contract on my first flip.
also, this is my first time acting as my own agent. I’m now a licensed California real estate agent and I can do transactions cheap! Side note, hit me up if you need a hand listing or buying! DRE# 02283361

So it’s a cute little house, only thing in town (Chico) for under $300k. But it needs the works. Floors have some saggy parts, same with roof. No hvac, appliances, not even a water heater lol. Plus all the cosmetics inside and out.
it’s more of a project than I wanted, but it’s the only project in town I can afford. Anything else would be a 30+ minute commute to Oroville or Durham. And I have a 2 and 4 year old and do day care drop off so that would make it tough time wise.
So I’m going for this one. I’m basically going all in as far as cash goes. I do have some rentals I could leverage but prefer not to.
Fo the Ease and speed I'm doing hard money. Financing costs will be about $12k all in over 6 months including interest. Maybe next time I'll line up a HELOC.

I’m an agent so I save commission on both sides. I’m doing all my own work, basically buying myself a full time job with flexible hours haha.
Conservative Reno budget is $50k but I’m shooting for half that.
Sales price will be $130k plus closing costs.

But ARV is a wild card. The immediate neighbors are horders and involved with drugs. They burnt down their house and rebuilt a shanty shack.
I’m gonna do what I can to limit the visibility. Maybe offer to build some fences for them.

If not for the neighbor it would be an easy $275k but I’m planing on $225k instead. Break even will be around $200k. I figure if everything goes terribly wrong, it will be a really good lesson and I’ll make my money back at least.

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Marcus Auerbach

Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes

6mo

Eric you are making a classic flip mistake that every contractor makes: you focus on repairing what's broken. The money is made with lifestyle upgrades and looks.

The things that make a house pretty and don't cost much. You are tackling all the things that cost money and absolutely invisible to the buyer! You are completely upside down in your thinking.

You have to fix the things to pass inspection, but the money is made with kitchens, bathrooms, flooring. By far the greatest ROI is paint. You will get zero money for fixing the crawlspace jack, even though you'll have to.

PS: day 1 put weed & feed on the lawn and set up sprinklers

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Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
6mo
@Eric Mcginn, a few thoughts:
1. Congrats on getting your real estate license and on getting your first flip project under contract.
2. I appreciate that you gave yourself a plug for business in your post! I definitely think you should work as an agent actively even if its just a side hustle.
Many folks would tell you to not bother with an RE license, but you can get experience doing it without putting your money at risk. You get to meet and work with people in the industry in ALL different capacities. It also keeps you engaged and up to date on changing laws, markets, etc.
3. Project management! There is a principle in project management that basically says that a project is definitely by 3 limiting factors: Time, Scope Of Work, and Money. It further states that if one of those factors is problematic, you can often compensate by making adjustments with the other 2 factors.
Learn this lesson and apply it often!
4. The first factor from #3 that jumped out at me as being a risk is TIME. You acknowledge your own personal time constraints but also plan to do "all my own work". In addition you are budgeting only 6 months for the rehab and using an expensive hard money loan putting financial pressure on the time. If it takes you 12 months instead of 6, your numbers change a lot.
Consider that if you can hire some cheap labor to work with you, that it may be cheaper to pay them than to pay the additional interest for the rehab timeframe slipping much longer.
The EASIEST labor intensive thing to hire out, is probably for a clean-out and demo. No special skills, not much direction required. So, I would at minimum consider hiring a couple guys to work with you on this to get things off to a fast start.
I would also consider finding someone with handyman skills at least to work with you. Many times you can do a project alone, BUT it might take 2-3x as long trying to do it without a 2nd set of hands.
5. Scope of Work. This one is HARD. Sounds like you have a "needs everything" house. First thing is I would look hard at the comps. What kinds of things are EXPECTED.
For example, everyone loves new expensive flooring, but maybe half of your comps have old refinished wood floors that you could do for half the price by renting a sander. These kinds of decisions are important for your scope of work. So, learn your market and what is expected to get the ARV you are aiming for.
6. Money! I would try to narrow down your budget a bit. I am very hands on and I don't think I could do an "everything house" today for $25k even if I did ALL the work myself.
7. Have you investigated permits. In many places the homeowner can only pull permits for their own primary residence. For an investment property, often you need a contractor to pull permits. In my state becoming a contractor isn't hard, mostly it involves getting proper insurance and registering with the state.
You don't want to get shut down or fined for not having permits. If you need to get licensed/registered as a contractor to pull permits you may wish to start on that now. Otherwise, you may wish to explore other options as well.
There are certainly areas of the country where rehabs are done without permits and without concern of that biting you later. If you think that is the case where you are double check and make sure. You don't want to get further into this and then find out you have a bis mess to deal with.
1 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  thank you very much for the detailed reply!
  yes I’m definitely interested in doing some side work as an agent. I’m paying enough for the memberships, I may as well put them to use!
  
  so time wise, I actually have lots of time, I was just trying to avoid an hour and a half round trip commute because that really eats up time and a project like this is going to be lot of work days.
  
  permits will all be pulled owner builder except if I want to upgrade the breaker panel I’ll have an electrician take care of that.
  
  CA only requires a license if your working for other people.
  I actually qualified for my GC and passed the exam but decided not to activate and maintain my license because it’s just an additional cost that I don’t need.
  
  the original hardwood is missing chunks and beyond refinishing IMO so I’m going with LVP throughout the house except probably tile in the bathroom because it has a free standing tub.
  
  as far as paying for labor, my biggest concern is limiting my liability.
  licensed and insured help gets much more expensive. This is largely why I plan on doing most of it without help!
  I do own a dump trailer and the landfill is near by so I save money on dumpsters and demo too
  
  Quote from @Kevin Sobilo:
  
  @Eric Mcginn, a few thoughts:
  1. Congrats on getting your real estate license and on getting your first flip project under contract.
  2. I appreciate that you gave yourself a plug for business in your post! I definitely think you should work as an agent actively even if its just a side hustle.
  Many folks would tell you to not bother with an RE license, but you can get experience doing it without putting your money at risk. You get to meet and work with people in the industry in ALL different capacities. It also keeps you engaged and up to date on changing laws, markets, etc.
  3. Project management! There is a principle in project management that basically says that a project is definitely by 3 limiting factors: Time, Scope Of Work, and Money. It further states that if one of those factors is problematic, you can often compensate by making adjustments with the other 2 factors.
  Learn this lesson and apply it often!
  4. The first factor from #3 that jumped out at me as being a risk is TIME. You acknowledge your own personal time constraints but also plan to do "all my own work". In addition you are budgeting only 6 months for the rehab and using an expensive hard money loan putting financial pressure on the time. If it takes you 12 months instead of 6, your numbers change a lot.
  Consider that if you can hire some cheap labor to work with you, that it may be cheaper to pay them than to pay the additional interest for the rehab timeframe slipping much longer.
  The EASIEST labor intensive thing to hire out, is probably for a clean-out and demo. No special skills, not much direction required. So, I would at minimum consider hiring a couple guys to work with you on this to get things off to a fast start.
  I would also consider finding someone with handyman skills at least to work with you. Many times you can do a project alone, BUT it might take 2-3x as long trying to do it without a 2nd set of hands.
  5. Scope of Work. This one is HARD. Sounds like you have a "needs everything" house. First thing is I would look hard at the comps. What kinds of things are EXPECTED.
  For example, everyone loves new expensive flooring, but maybe half of your comps have old refinished wood floors that you could do for half the price by renting a sander. These kinds of decisions are important for your scope of work. So, learn your market and what is expected to get the ARV you are aiming for.
  6. Money! I would try to narrow down your budget a bit. I am very hands on and I don't think I could do an "everything house" today for $25k even if I did ALL the work myself.
  7. Have you investigated permits. In many places the homeowner can only pull permits for their own primary residence. For an investment property, often you need a contractor to pull permits. In my state becoming a contractor isn't hard, mostly it involves getting proper insurance and registering with the state.
  You don't want to get shut down or fined for not having permits. If you need to get licensed/registered as a contractor to pull permits you may wish to start on that now. Otherwise, you may wish to explore other options as well.
  There are certainly areas of the country where rehabs are done without permits and without concern of that biting you later. If you think that is the case where you are double check and make sure. You don't want to get further into this and then find out you have a bis mess to deal with.
  
  0 Reply
Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 494 votes
6mo
Congratulations! For your next project, there are some good fix and flip loan programs where you can finance up to 90% of the purchase price and 100% of the rehab (done on draws). It will depend on the specific property and borrower credit score and profile.
HELOCs are another option. There are some options that are an easier underwrite due to online verifications so not lots of sending in paperwork.
In deciding on the type of financing you will use will depend on how long you will use the financing and then if you will sell the property or BRRRR and convert it to long term financing such as a DSCR loan. DSCR loans have shorter seasoning periods between when you buy the property and when you can get your cash back through a refinance. For conventional investment loans, the waiting time is a year. For DSCR loans, it can be 3-6 months- sometimes less depending on the property details. Happy to connect to discuss further.
[email protected]818-770-0340
Bright Skyline518 Reviews
Website View Page
1 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  thank you for the response and info!
  
  Yea financing is definitely a place I could do things differently next time. But I do have a finance guy I’ve worked with before that’s doing pretty well for me.
  compared to another quote (term sheet) I got from another company I’m saving like $3k
  
  they are both the Fix and flip type loans you mentioned. That’s what I’ll be using in the end.
  
  the goal for this one is to sell, the rental numbers don’t work great in Chico partly because of the enormous rental inventory for college students in town.
  
  but now that you mention it, a DSCR could still be useful for flips. I have small rental property that I own outright that I could pull a DSCR for the purchase price next time!
  it’s crazy how many ways there are to skin a cat as they say.
  
  Quote from @Stacy Raskin:
  
  Congratulations! For your next project, there are some good fix and flip loan programs where you can finance up to 90% of the purchase price and 100% of the rehab (done on draws). It will depend on the specific property and borrower credit score and profile.
  HELOCs are another option. There are some options that are an easier underwrite due to online verifications so not lots of sending in paperwork.
  In deciding on the type of financing you will use will depend on how long you will use the financing and then if you will sell the property or BRRRR and convert it to long term financing such as a DSCR loan. DSCR loans have shorter seasoning periods between when you buy the property and when you can get your cash back through a refinance. For conventional investment loans, the waiting time is a year. For DSCR loans, it can be 3-6 months- sometimes less depending on the property details. Happy to connect to discuss further.
  
  0 Reply
- Stacy RaskinBusiness Member
  Lender · Member since 2022 · 1k+ posts · 494 votes
  6mo
  Quote from @Eric Mcginn:
  
  thank you for the response and info!
  
  Yea financing is definitely a place I could do things differently next time. But I do have a finance guy I’ve worked with before that’s doing pretty well for me.
  compared to another quote (term sheet) I got from another company I’m saving like $3k
  
  they are both the Fix and flip type loans you mentioned. That’s what I’ll be using in the end.
  
  the goal for this one is to sell, the rental numbers don’t work great in Chico partly because of the enormous rental inventory for college students in town.
  
  but now that you mention it, a DSCR could still be useful for flips. I have small rental property that I own outright that I could pull a DSCR for the purchase price next time!
  it’s crazy how many ways there are to skin a cat as they say.
  
  Quote from @Stacy Raskin:
  
  Congratulations! For your next project, there are some good fix and flip loan programs where you can finance up to 90% of the purchase price and 100% of the rehab (done on draws). It will depend on the specific property and borrower credit score and profile.
  HELOCs are another option. There are some options that are an easier underwrite due to online verifications so not lots of sending in paperwork.
  In deciding on the type of financing you will use will depend on how long you will use the financing and then if you will sell the property or BRRRR and convert it to long term financing such as a DSCR loan. DSCR loans have shorter seasoning periods between when you buy the property and when you can get your cash back through a refinance. For conventional investment loans, the waiting time is a year. For DSCR loans, it can be 3-6 months- sometimes less depending on the property details. Happy to connect to discuss further.
  
  Sure, you're welcome! Fix and flip and DSCR programs have guidelines that vary by lender so it's good to work with those that specialize in the space.
  Some landlords rent properties by the room in college towns- that might be an idea if you think it could work and support your real estate investment goals.
  [email protected]818-770-0340
  Bright Skyline518 Reviews
  Website View Page
  1 Reply
Janice Carter
Real Estate Broker · Atlanta · Member since 2024 · 1k+ posts · 604 votes
6mo
Eric, congrats on getting your first flip under contract. That is a major milestone. I did just caution you on two things. First, foundation and roof sagging signal potential structural issues. Have a contractor or structural engineer evaluate it early. That is typically where rehab budgets get derailed. Second, build in cushion on both your renovation budget and your timeline. Six months passes quickly, especially with hard money.

If you can stay all in around $200K and realistically sell at $225K or higher, the numbers work. But if your total project cost drifts into the $215K–$220K range, your margin tightens fast.
1 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  
  thank you, yes I did pay for a home inspection. Luckily all the walls and roof and ridge are nice and square and straight. The rafters are all in good shape, they are just 100 years old and only 2x4s without any bracing so they are tired and sagging in the middle.
  
  I do have an engineering degree (not structural) and have worked in the trades, I’m pretty comfortable with the minor structural improvements I plan on making.
  
  for sure those two elements are where potential budget destruction could happen though.
  
  Quote from @Janice Carter:
  
  Eric, congrats on getting your first flip under contract. That is a major milestone. I did just caution you on two things. First, foundation and roof sagging signal potential structural issues. Have a contractor or structural engineer evaluate it early. That is typically where rehab budgets get derailed. Second, build in cushion on both your renovation budget and your timeline. Six months passes quickly, especially with hard money.
  
  If you can stay all in around $200K and realistically sell at $225K or higher, the numbers work. But if your total project cost drifts into the $215K–$220K range, your margin tightens fast.
  
  0 Reply
Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
6mo
My first take is that $50k is way too low for your rehab budget! Do you have an actual proposal from a licensed GC, or is that your guesstimate price?
Definitely not half that ($25k). The roof will be $10k and that's not figuring in bad wood under those old shingles. a new floor is several thousand. Kitchen $10k. Etc, Etc......
Recheck your prices! Or list your SOW and let us take a look......
1 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Bruce Woodruff:
  
  My first take is that $50k is way too low for your rehab budget! Do you have an actual proposal from a licensed GC, or is that your guesstimate price?
  Definitely not half that ($25k). The roof will be $10k and that's not figuring in bad wood under those old shingles. a new floor is several thousand. Kitchen $10k. Etc, Etc......
  Recheck your prices! Or list your SOW and let us take a look......
  
  It’s a small and very simple house. I’m a general contractor, I don’t maintain the license because I don’t want to work for other people.
  also, I’m keeping the layout, bathtub, kitchen cabinets and maybe even the counters.
  So all I really have is material cost. I even own a little dump trailer:
  Structure (crawlspace jack, posts, beam, addition repair) — $4,500
  
  Roof (sheathing repairs, underlayment, shingles, flashing, fasteners) — $5,500
  
  Exterior siding + full paint — $3,200
  
  Electrical (new 100 amp panel installed + misc wiring) — $2,400
  
  HVAC (two mini splits installed) — $3,000
  
  Plumbing (repairs, fixtures, gas water heater) — $1,600
  
  Flooring (full house LVP materials) — $4,000
  
  Bathroom (tile demo, surround rebuild, waterproofing, finishes) — $1,800
  
  Kitchen (cabinet repair, paint, hardware, minor fixes) — $700
  
  Interior surfaces (drywall patching, full interior paint, trim fixes) — $1,500
  
  Yard / site (deck removal, mulch seating area, seed, gravel) — $700
  
  Permits / inspections — $500
  
  Dump / haul / delivery — $600
  
  Tools / consumables — $500
  
  Subtotal — $30,500
  
  Aggressive low scenario — $25k–$27k
  
  Typical real-world outcome — $35k–$40k
  
  2 Reply
- Bruce WoodruffPro Member
  Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
  6mo
  Quote from @Eric Mcginn:
  
  Quote from @Bruce Woodruff:
  
  My first take is that $50k is way too low for your rehab budget! Do you have an actual proposal from a licensed GC, or is that your guesstimate price?
  Definitely not half that ($25k). The roof will be $10k and that's not figuring in bad wood under those old shingles. a new floor is several thousand. Kitchen $10k. Etc, Etc......
  Recheck your prices! Or list your SOW and let us take a look......
  
  It’s a small and very simple house. I’m a general contractor, I don’t maintain the license because I don’t want to work for other people.
  also, I’m keeping the layout, bathtub, kitchen cabinets and maybe even the counters.
  So all I really have is material cost. I even own a little dump trailer:
  Structure (crawlspace jack, posts, beam, addition repair) — $4,500
  
  Roof (sheathing repairs, underlayment, shingles, flashing, fasteners) — $5,500
  
  Exterior siding + full paint — $3,200
  
  Electrical (new 100 amp panel installed + misc wiring) — $2,400
  
  HVAC (two mini splits installed) — $3,000
  
  Plumbing (repairs, fixtures, gas water heater) — $1,600
  
  Flooring (full house LVP materials) — $4,000
  
  Bathroom (tile demo, surround rebuild, waterproofing, finishes) — $1,800
  
  Kitchen (cabinet repair, paint, hardware, minor fixes) — $700
  
  Interior surfaces (drywall patching, full interior paint, trim fixes) — $1,500
  
  Yard / site (deck removal, mulch seating area, seed, gravel) — $700
  
  Permits / inspections — $500
  
  Dump / haul / delivery — $600
  
  Tools / consumables — $500
  
  Subtotal — $30,500
  
  Aggressive low scenario — $25k–$27k
  
  Typical real-world outcome — $35k–$40k
  
  Well that will certainly help you being in the business! I wish you luck of course, but I still seems a hair low, having done this myself quite a few times. But if you do all the work personally yourself, you might pull it off! Let us know how it goes...
  0 Reply
Taylor DaschBusiness Member
Real Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votes
6mo
Sounds like a good base hit, a lot of people say you wont make money with that spread but if you have everything conservatively factored in you will be good! Not sure if you did this, but in the future if it already nees everything, I just drop the option period aha, your replacing everything anyways and they are more likely to accept a lower offer.
[email protected]254-718-4249
Taylor Dasch | EG Realty560 Reviews
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1 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Taylor Dasch:
  
  Sounds like a good base hit, a lot of people say you wont make money with that spread but if you have everything conservatively factored in you will be good! Not sure if you did this, but in the future if it already nees everything, I just drop the option period aha, you’re replacing everything anyways and they are more likely to accept a lower offer.
  THANK YOU! yes I’ve been conservative with everything. It works better for me than others because I’m an agent and contractor. I offered a 15 day closing but I did keep inspection and financing contingency. Not appraisal though.
  
  0 Reply
Alan F.
Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes
6mo
Congratulations on your 1st flip! It's my understanding that Butte county & Chico adopted the 2025 code cycle (title 24 et al) on the 1st of this year. Also pay attention to AB 968. Best of luck!
0 Reply
Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
6mo
Quote from @Eric Mcginn:

I’m under contract on my first flip.
also, this is my first time acting as my own agent. I’m now a licensed California real estate agent and I can do transactions cheap! Side note, hit me up if you need a hand listing or buying! DRE# 02283361

So it’s a cute little house, only thing in town (Chico) for under $300k. But it needs the works. Floors have some saggy parts, same with roof. No hvac, appliances, not even a water heater lol. Plus all the cosmetics inside and out.
it’s more of a project than I wanted, but it’s the only project in town I can afford. Anything else would be a 30+ minute commute to Oroville or Durham. And I have a 2 and 4 year old and do day care drop off so that would make it tough time wise.
So I’m going for this one. I’m basically going all in as far as cash goes. I do have some rentals I could leverage but prefer not to.
Fo the Ease and speed I'm doing hard money. Financing costs will be about $12k all in over 6 months including interest. Maybe next time I'll line up a HELOC.

I’m an agent so I save commission on both sides. I’m doing all my own work, basically buying myself a full time job with flexible hours haha.
Conservative Reno budget is $50k but I’m shooting for half that.
Sales price will be $130k plus closing costs.

But ARV is a wild card. The immediate neighbors are horders and involved with drugs. They burnt down their house and rebuilt a shanty shack.
I’m gonna do what I can to limit the visibility. Maybe offer to build some fences for them.

If not for the neighbor it would be an easy $275k but I’m planing on $225k instead. Break even will be around $200k. I figure if everything goes terribly wrong, it will be a really good lesson and I’ll make my money back at least.

Congrats on taking the jump! Having a background in RE certainly helps
[email protected]818-269-7983
LuxePrivate Investments LLC 572 Reviews
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1 Reply
Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
6mo
@Eric Mcginn Are you planning to do all the above projects yourself? That's an incredibly lofty goal but more power to you!

Like @Bruce Woodruff we have completed a handful of remodels our self and saved a lot of money but it's not sustainable. I wouldn't have done it any other way because I needed to learn the costs. The cheapest deal was my first BRRRR in 2018 and it costs me $19k including a new roof (hired out). Things have skyrocketed sense and a conservative estimate for the same property would be $35k just in materials. That's easily a $45-55k remodel hired out for 2/1 (1100sqft.) SFH. Because the OP is in Cali labor is probably more expensive also.

Funny - the material costs listed are almost spot on to a property we're trying to sell. We're basically 2x that with our labor costs.

Cheers.
1 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Jaron Walling:
  
  @Eric Mcginn Are you planning to do all the above projects yourself? That's an incredibly lofty goal but more power to you!
  
  Like @Bruce Woodruff we have completed a handful of remodels our self and saved a lot of money but it's not sustainable. I wouldn't have done it any other way because I needed to learn the costs. The cheapest deal was my first BRRRR in 2018 and it costs me $19k including a new roof (hired out). Things have skyrocketed sense and a conservative estimate for the same property would be $35k just in materials. That's easily a $45-55k remodel hired out for 2/1 (1100sqft.) SFH. Because the OP is in Cali labor is probably more expensive also.
  
  Funny - the material costs listed are almost spot on to a property we're trying to sell. We're basically 2x that with our labor costs.
  
  Cheers.
  Yep, I can do it all! But I’ll be subbing the floor and getting a gardener and maybe a painter too.
  1 Reply
Bo SmithPro Member
Hinton, WV · Member since 2026 · 1k+ posts · 373 votes
6mo
Eric, congrats on getting under contract. Kevin's point about time is the real killer here, and I'd emphasize it -- you've got a 6-month timeline with hard money, an under-300K purchase price, and you're planning to do most of the work yourself while managing two kids and daycare runs. That's ambitious.
Demo and cleanup are the fastest things to hire out and the biggest time savers. Even at 5-20/hr, paying two people to pull out old flooring, haul garbage, and frame out walls while you focus on higher-level decisions (inspections, permits, GC coordination) will pay for itself in interest savings if it cuts your timeline by 4-6 weeks.
On the ARV side -- you're right to be conservative with problem neighbors. But buyers see it too, so don't underestimate the impact. If your break-even is 200K and your realistic ARV is 225K, you've got a 12% margin. That's thin if anything goes sideways. Have you stress-tested the deal at 200K ARV? Because if the property sits at 215K, you've lost money.
How much of the 50K reno budget are you holding for contingency, and what's the cost per square foot you're estimating for the major systems (roof, HVAC, electrical)?
0 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Bo Smith:
  
  Eric, congrats on getting under contract. Kevin's point about time is the real killer here, and I'd emphasize it -- you've got a 6-month timeline with hard money, an under-300K purchase price, and you're planning to do most of the work yourself while managing two kids and daycare runs. That's ambitious.
  Demo and cleanup are the fastest things to hire out and the biggest time savers. Even at 5-20/hr, paying two people to pull out old flooring, haul garbage, and frame out walls while you focus on higher-level decisions (inspections, permits, GC coordination) will pay for itself in interest savings if it cuts your timeline by 4-6 weeks.
  On the ARV side -- you're right to be conservative with problem neighbors. But buyers see it too, so don't underestimate the impact. If your break-even is 200K and your realistic ARV is 225K, you've got a 12% margin. That's thin if anything goes sideways. Have you stress-tested the deal at 200K ARV? Because if the property sits at 215K, you've lost money.
  How much of the 50K reno budget are you holding for contingency, and what's the cost per square foot you're estimating for the major systems (roof, HVAC, electrical)?
  Thank! Yes it’s all stress tested and absolutely worst case is I’m getting a good lesson for free.
  But more likely I’m making decent money, I strongly feel it would sell quick at $250k and maybe even more. There is nothing currently available for under $300k in town. So I’m already including a steep discount for the neighbors.
  I hear you with hiring help, and I’ll look around, but honestly I work well alone. And I’m a very physically capable person. I’ll definitely consider it, and I plan to sub out the floor, because I hate doing flooring. But everything else, I’m good.
  I move fast.
  I plan at night, I stay hyper focused but always looking big picture. I’ve done roofing, I’ve done framing, I’ve done it all. And yes time is a constraint but I actually have more time available than I made it seem. Mama can do daycare 2 days a week and I can do weekends. Plus even day care days I have 4 hours between pickup and drop off.
  so I will focus on the highest ROI for my time but I also have plenty of time to demo and haul off the deck myself.
  yard work is probably a good idea for me to not get too caught up in, easy to hire a gardener. Maybe a painter too.
  
  0 Reply
Spence W.
Investor · Member since 2026 · 38 posts · 40 votes
6mo
Your material costs look tight but doable since you're keeping the layout and supplying the labor. I evaluated some turnkey properties in Indianapolis recently. The county permit records showed zero permits pulled for the electrical and plumbing work they advertised as brand new. Buyers will definitely check the official permit file for your planned 100 amp panel upgrade.
That said, your timeline is the biggest hidden risk. Working around a day care schedule means a six-month hard money clock will expire fast. Pay someone for the demo phase. If you slip to nine months, those extra interest payments will wipe out whatever you saved on manual labor.
Have you calculated exactly how much one extra month of holding costs drops your projected profit?
1 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Spence W.:
  
  Your material costs look tight but doable since you're keeping the layout and supplying the labor. I evaluated some turnkey properties in Indianapolis recently. The county permit records showed zero permits pulled for the electrical and plumbing work they advertised as brand new. Buyers will definitely check the official permit file for your planned 100 amp panel upgrade.
  That said, your timeline is the biggest hidden risk. Working around a day care schedule means a six-month hard money clock will expire fast. Pay someone for the demo phase. If you slip to nine months, those extra interest payments will wipe out whatever you saved on manual labor.
  Have you calculated exactly how much one extra month of holding costs drops your projected profit?
  Hey thank you for the thoughtful response!!
  yes the breaker upgrade I will sub out and will definitely be permitted.
  each month costs about $1300
  there’s not much for demo, maybe 3-4 days all together. I’m gonna sub floor and possibly paint. I’ll kind of triage as I see how things go!
  it’s a 12month loan with no prepayment penalty. I want to say $212k was the 12 month full budget break even
  0 Reply
Judith Iael
Member since 2024 · 4 posts · 2 votes
6mo
@Eric Mcginn Congratulations!
I recommend you to use RENODU (https://renodu.com/) to organize all the renovation there. Even your contractor can use it :)
Helped me a lot.

All the luck with the process!

1 Reply
Judith Iael
Member since 2024 · 4 posts · 2 votes
6mo
Quote from @Eric Mcginn:

I’m under contract on my first flip.
also, this is my first time acting as my own agent. I’m now a licensed California real estate agent and I can do transactions cheap! Side note, hit me up if you need a hand listing or buying! DRE# 02283361

So it’s a cute little house, only thing in town (Chico) for under $300k. But it needs the works. Floors have some saggy parts, same with roof. No hvac, appliances, not even a water heater lol. Plus all the cosmetics inside and out.
it’s more of a project than I wanted, but it’s the only project in town I can afford. Anything else would be a 30+ minute commute to Oroville or Durham. And I have a 2 and 4 year old and do day care drop off so that would make it tough time wise.
So I’m going for this one. I’m basically going all in as far as cash goes. I do have some rentals I could leverage but prefer not to.
Fo the Ease and speed I'm doing hard money. Financing costs will be about $12k all in over 6 months including interest. Maybe next time I'll line up a HELOC.

I’m an agent so I save commission on both sides. I’m doing all my own work, basically buying myself a full time job with flexible hours haha.
Conservative Reno budget is $50k but I’m shooting for half that.
Sales price will be $130k plus closing costs.

But ARV is a wild card. The immediate neighbors are horders and involved with drugs. They burnt down their house and rebuilt a shanty shack.
I’m gonna do what I can to limit the visibility. Maybe offer to build some fences for them.

If not for the neighbor it would be an easy $275k but I’m planing on $225k instead. Break even will be around $200k. I figure if everything goes terribly wrong, it will be a really good lesson and I’ll make my money back at least.

@Eric Mcginn Congratulations!
I recommend you to use RENODU to organize all the renovation there. Even your contractor can use it :)
Helped me a lot.

All the luck with the process!
0 Reply

Eric FernwoodBusiness Member

Realtor · Las Vegas, NV · Member since 2014 · 991 posts · 1k+ votes

6mo

Hello @Eric Mcginn,

Flipping houses can make you money or cost you money. Success depends on four things:

Buying at the right price.
Renovating on budge
Finishing on schedule
Selling at the projected price.

Eric, you already bought this property, but these principles still apply. Where did I get this information? From 2009 to 2013, many of my clients flipped homes. As an engineer, I built systems to calculate a maximum purchase price and control renovation costs. We have also delivered over 600 buy-and-hold investment properties, and each required renovation.

Profit and Loss Considerations

Many people talk about big wins with flipping, but few talk about losses. Flipping is like gambling; you hear about the winners, not the losers.

Key considerations:

Match the market. Spend only what you need to match recently sold similar homes. Do not over improve.
Set a realistic sale price. The market decides value, not your opinion. Be conservative.
Control labor costs and quality. In my experience, licensed contractors cost more than handymen but often deliver poor-quality work and rarely stick to schedules. A reliable handyman team can complete most work at about one-third the cost of licensed contractors. In our experience, the handyman services we use deliver much higher quality and maintain schedules. Since you are a GC, you won’t have to worry about labor costs, but time will be your main cost.
Use strong project management. Without it, costs rise, time lapses, and quality falls.
Time costs money. Add buffers for delays.
Account for risk. Unexpected costs add up fast.

Maximum You Can Pay

Use this formula:

Maximum Purchase Price < Sale Price − All Costs

For example, suppose you are considering a property for flipping. You believe that the after-repair value is $200,000. Selling costs are 6 percent, which is about $12,000. Renovation cost will be $50,000. Project management is $5,000. Target profit is $20,000. Cost pad is $5,000.

Assume you paid cash, so no monthly debt service. Your monthly holding costs are:

Taxes: $117
Insurance: $67
Utilities: $200
Other costs: $25

The total monthly holding cost is $409/Mo. If you hold the property for 8 months, your total carrying cost is about $3,272.

Below is a table showing all the costs and time.

Description	Costs	Time (Mo)
Cost to sell	12000
Months to close		4
Renovation	50000	3
Project Management	5000
Profit	20000
Cost pad	5000
Time pad		1
Closing costs (buy)	2000
Carrying costs	3272
Total	97272	8

Using the formula:

Maximum Purchase Price < Sale Price − All Costs
The maximum you can pay is: $200,000 - $97,272 or $102,728.

You will almost certainly lose money if:

If you pay more than the Maximum Purchase Price
You sell the property for less or it takes longer than planned
The renovation costs more or takes longer than expected

Summary

Flipping is a business. It requires experience, discipline, planning, and strong oversight. Do your homework before making an offer. Many of my flip clients bid on more than five properties before securing one.

[email protected]702-358-8884

FERNWOOD Team, KW VIP Realty520 Reviews

Website View Page

1 Reply

Eric Mcginn

Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes

6mo

Quote from @Eric Fernwood:

Hello @Eric Mcginn,

Flipping houses can make you money or cost you money. Success depends on four things:

Buying at the right price.
Renovating on budge
Finishing on schedule
Selling at the projected price.

Profit and Loss Considerations

Many people talk about big wins with flipping, but few talk about losses. Flipping is like gambling; you hear about the winners, not the losers.

Key considerations:

Match the market. Spend only what you need to match recently sold similar homes. Do not over improve.
Set a realistic sale price. The market decides value, not your opinion. Be conservative.
Control labor costs and quality. In my experience, licensed contractors cost more than handymen but often deliver poor-quality work and rarely stick to schedules. A reliable handyman team can complete most work at about one-third the cost of licensed contractors. In our experience, the handyman services we use deliver much higher quality and maintain schedules. Since you are a GC, you won’t have to worry about labor costs, but time will be your main cost.
Use strong project management. Without it, costs rise, time lapses, and quality falls.
Time costs money. Add buffers for delays.
Account for risk. Unexpected costs add up fast.

Maximum You Can Pay

Use this formula:

Maximum Purchase Price < Sale Price − All Costs

Assume you paid cash, so no monthly debt service. Your monthly holding costs are:

Taxes: $117
Insurance: $67
Utilities: $200
Other costs: $25

The total monthly holding cost is $409/Mo. If you hold the property for 8 months, your total carrying cost is about $3,272.

Below is a table showing all the costs and time.

Description	Costs	Time (Mo)
Cost to sell	12000
Months to close		4
Renovation	50000	3
Project Management	5000
Profit	20000
Cost pad	5000
Time pad		1
Closing costs (buy)	2000
Carrying costs	3272
Total	97272	8

Using the formula:

Maximum Purchase Price < Sale Price − All Costs
The maximum you can pay is: $200,000 - $97,272 or $102,728.

You will almost certainly lose money if:

If you pay more than the Maximum Purchase Price
You sell the property for less or it takes longer than planned
The renovation costs more or takes longer than expected

Summary

Fantastic!!
I’m also an engineer and I’m all about the numbers!!

At this point in my life my numbers are a bit different. I’m small scale, but vertically integrated.

My project management costs are $0
My selling costs are half off!

unfortunately holding costs are quite a bit more at 9.9% but still manageable.

considering typical ARV would be $270k and I expect to sell it between $225k-$250k, it seems like my $130k sales price will work out with a break even point as a worst case scenario more or less.
that’s basically how I’ve gone into this. Hoping to make $50k but willing to make $0 for a good learning experience and the opportunity

And EXCELLENT point regarding a handyman crew!! I will plan on using that concept!!

0 Reply

Ying Tang
Member since 2025 · 316 posts · 119 votes
6mo
Congratulations! I'm in Arizona and I got license to purchase for myself too. It's even better that you are a GC! I did my own flooring, repair my appliances, change and fix toilets, change gfci, etc. But I am not able to do anything heavy..
1 Reply
Bo SmithPro Member
Hinton, WV · Member since 2026 · 1k+ posts · 373 votes
6mo
Eric, Kevin's point about time is the one that's going to bite you. You're right on the edge of a bad situation: hard money costs, time constraints, doing your own work, and a 0k budget on a house that needs structural work. The roof and floor saggy spots tell me this isn't cosmetic -- that's structural, and structural is where every investor underestimates by 30-50%. Your 0k plan to drop it to 5k will not happen. Just accept that now.
The neighbor situation is also gnawing at me. You can't control neighbor properties in your exit strategy, and if your ARV assumes they shape up, you're holding a bag if they don't. Your 25k ARV guess assumes a lot. I'd underwrite to 95-200k and assume you're holding it. If the upside is lower than that, the deal doesn't pencil.
The hard money thing: 2k in fees over 6 months is real capital drag. Kevin's right that hiring out the demo and rough work might be cheaper than paying extra interest if you slip to month 8 or 9. A two-person demo crew costs -3k and might save you 6-8 weeks, which covers itself in hard money costs alone. You're doing day care drop-offs, so you're not actually available 40 hours a week -- build that into your timeline. What's your real ARV estimate if nothing changes with the neighbors, and are you planning to hold or flip it?
0 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Bo Smith:
  
  Eric, Kevin's point about time is the one that's going to bite you. You're right on the edge of a bad situation: hard money costs, time constraints, doing your own work, and a 0k budget on a house that needs structural work. The roof and floor saggy spots tell me this isn't cosmetic -- that's structural, and structural is where every investor underestimates by 30-50%. Your 0k plan to drop it to 5k will not happen. Just accept that now.
  The neighbor situation is also gnawing at me. You can't control neighbor properties in your exit strategy, and if your ARV assumes they shape up, you're holding a bag if they don't. Your 25k ARV guess assumes a lot. I'd underwrite to 95-200k and assume you're holding it. If the upside is lower than that, the deal doesn't pencil.
  The hard money thing: 2k in fees over 6 months is real capital drag. Kevin's right that hiring out the demo and rough work might be cheaper than paying extra interest if you slip to month 8 or 9. A two-person demo crew costs -3k and might save you 6-8 weeks, which covers itself in hard money costs alone. You're doing day care drop-offs, so you're not actually available 40 hours a week -- build that into your timeline. What's your real ARV estimate if nothing changes with the neighbors, and are you planning to hold or flip it?
  Hi Bo, thanks for the reply.
  most of your numbers are not accurate on what I previously stated.
  demo is 2-3 days not 6-8 weeks.
  
  neighbors are acccounted for but of course I don’t know how much or to what degree they should be. ARV if neighbors were good would be ~$275k
  
  So $250k is realistic
  $225k is worst case.
  
  theres nothing available in town for under $300k so that’s what’s available.
  
  it’s not gonna be a home run, but it’s all easy work for me and I’ll hire out maybe painting and definitely flooring, it all pencils out well enough under stress tests that I’m going to move forward with it!
  
  0 Reply
Ryan Graf
Member since 2026 · 1 post · 1 vote
6mo
Congrats on getting your first flip under contract! Huge accomplishment.
I like the angle here and deal thesis. It's also good that you have a conservative rehab budget built into your underwriting and know your break-even. On a first flip, survival > maximizing profit. So your approaching this the right way.
A few thoughts (purely from risk management standpoint):
1. The neighbor situation isn't a small variable. It directly impacts buyer psychology, appraisal comps, and days on market. I like the idea of building a fence, but I'd also consider some landscaping options to create natural separation and sound dampening.
2. Structural items (sagging floors and roof) can escalate fast. I'd suggest having a contractor give you a firm opinion/estimate prior to close. That's probably your biggest cost variable right now and if you get an estimate prior to close, you can work that into the negotiation with the seller.
1 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Ryan Graf:
  
  Congrats on getting your first flip under contract! Huge accomplishment.
  I like the angle here and deal thesis. It's also good that you have a conservative rehab budget built into your underwriting and know your break-even. On a first flip, survival > maximizing profit. So your approaching this the right way.
  A few thoughts (purely from risk management standpoint):
  1. The neighbor situation isn't a small variable. It directly impacts buyer psychology, appraisal comps, and days on market. I like the idea of building a fence, but I'd also consider some landscaping options to create natural separation and sound dampening.
  2. Structural items (sagging floors and roof) can escalate fast. I'd suggest having a contractor give you a firm opinion/estimate prior to close. That's probably your biggest cost variable right now and if you get an estimate prior to close, you can work that into the negotiation with the seller.
  Thank you!
  It might not make sense to some, but in the current market, I could be waiting years for a better opportunity at an entry price I can afford. Plus it’s all within my scope of time and abilities.
  
  No matter what, I’m making progress.
  actually, I realized when applying for financing that it will be 3 years since my last real estate deal in May! Financers want to see a deal within the last 3 years so that was interesting to learn.
  
  1. This is THE variable.
  this is why no one else scooped it up. I’m definitely going to try from all angles to improve the optics. It’s bad. This is the only reason I can’t count on a $275k ARV. INSTEAD im bracing for $215k
  I appreciate your ideas on that, I’ll definitely update here, maybe I can post some pictures.
  
  im pretty good with people, even horder drug adicts tend to like me so we’ll see what I can come up with.
  
  2. Yea I checked it out with a home inspector. He was pretty comfortable with the sag and the framing structure and noted it had been improved at some point. But I plan on adding a few lally columns on footers to split the difference at least. And the roof is a separate issue. The ridge and walls are nice and square and straight. They just built the roof with long 2x4s and they get a little tired 100 years later. So I’ll just be framing in a knee wall in the attic to get a nice straight plane before stripping it and putting the new shingles on. Unfortunately there’s one more structural issue too, there’s a little addition that I’m going to have to put in a new rim beam and add some footers. It was built very poorly like a porch so there’s a chance it might all just get scrapped. But then there wouldn’t be a laundry room. It’s on file as an enclosed porch.
  
  0 Reply
Bo SmithPro Member
Hinton, WV · Member since 2026 · 1k+ posts · 373 votes
6mo
A couple things stand out here, Eric. First, congrats on getting under contract -- that's the hard part. But I'd pump the brakes on doing all the work yourself. You've got two young kids, a day care schedule, and you're already tight on the budget. That's a recipe for the project dragging 8-12 months instead of 6, and hard money costs explode when timelines slip.
Your conservative estimate of 50k in reno costs cutting to 25k -- that's a huge red flag. Projects almost always run over, not under, especially on mechanicals and structural issues. Those saggy floors and roof? Get a structural engineer out there before close. A 00 inspection now might save you thousands in surprise costs later. And the HVAC, plumbing, electrical rebuild? That's not DIY territory if you want to stay on timeline.
One hard-won lesson: hire a demo crew first thing. It's maybe 3-4k and gets you to real visibility on what you're dealing with. Then hire a solid GC or at least a foreman who knows Chico. You save money on the interest side by keeping it on schedule.
What's your timeline looking like for close and demo start?
0 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Bo Smith:
  
  A couple things stand out here, Eric. First, congrats on getting under contract -- that's the hard part. But I'd pump the brakes on doing all the work yourself. You've got two young kids, a day care schedule, and you're already tight on the budget. That's a recipe for the project dragging 8-12 months instead of 6, and hard money costs explode when timelines slip.
  Your conservative estimate of 50k in reno costs cutting to 25k -- that's a huge red flag. Projects almost always run over, not under, especially on mechanicals and structural issues. Those saggy floors and roof? Get a structural engineer out there before close. A 00 inspection now might save you thousands in surprise costs later. And the HVAC, plumbing, electrical rebuild? That's not DIY territory if you want to stay on timeline.
  One hard-won lesson: hire a demo crew first thing. It's maybe 3-4k and gets you to real visibility on what you're dealing with. Then hire a solid GC or at least a foreman who knows Chico. You save money on the interest side by keeping it on schedule.
  What's your timeline looking like for close and demo start?
  
  Thank you for the info and heads up.
  Plumbing, HVAC, electric, these things are easy for me. Demo is minimal plus I enjoy it, flooring is something I don’t enjoy. Plan is to do it all myself and sub out as I see fit. $50k is all subbed out. $25k is all DIY. This is a very basic house.
  Have you ever hired a structural engineer to look at a house before buying it?
  I used a reputable home inspector, and this might be my first flip but it’s not my first rodeo. I grew up jacking and leveling foundations. I own 9 rentals properties and half of them are pre 1900s.
  closing in less than two weeks and getting to work immediately. I have everything planned out.
  Will update here!
  
  0 Reply
Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
6mo
Eric you are making a classic flip mistake that every contractor makes: you focus on repairing what's broken. The money is made with lifestyle upgrades and looks.
The things that make a house pretty and don't cost much. You are tackling all the things that cost money and absolutely invisible to the buyer! You are completely upside down in your thinking.
You have to fix the things to pass inspection, but the money is made with kitchens, bathrooms, flooring. By far the greatest ROI is paint. You will get zero money for fixing the crawlspace jack, even though you'll have to.
PS: day 1 put weed & feed on the lawn and set up sprinklers
2 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Marcus Auerbach:
  
  Eric you are making a classic flip mistake that every contractor makes: you focus on repairing what's broken. The money is made with lifestyle upgrades and looks.
  The things that make a house pretty and don't cost much. You are tackling all the things that cost money and absolutely invisible to the buyer! You are completely upside down in your thinking.
  You have to fix the things to pass inspection, but the money is made with kitchens, bathrooms, flooring. By far the greatest ROI is paint. You will get zero money for fixing the crawlspace jack, even though you'll have to.
  PS: day 1 put weed & feed on the lawn and set up sprinklers
  Why are you assuming I’m not going to paint? Or improve the bathroom?
  You say I need to fix these things yet I shouldn’t be focusing on them? It seems like you’re the one with upside down thinking. They are step one so that’s where I’ll start.
  
  i understand curb appeal and once I get the roof and floor closer to flat, aesthetics will become the primary focus.
  Yes I already bought the grass seed. 👍
  Thank you for the input reminder that I need to make the house pretty, trust me that that’s the plan!
  0 Reply
- Marcus Auerbach
  Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
  6mo
  Quote from @Eric Mcginn:
  
  Quote from @Marcus Auerbach:
  
  Eric you are making a classic flip mistake that every contractor makes: you focus on repairing what's broken. The money is made with lifestyle upgrades and looks.
  The things that make a house pretty and don't cost much. You are tackling all the things that cost money and absolutely invisible to the buyer! You are completely upside down in your thinking.
  You have to fix the things to pass inspection, but the money is made with kitchens, bathrooms, flooring. By far the greatest ROI is paint. You will get zero money for fixing the crawlspace jack, even though you'll have to.
  PS: day 1 put weed & feed on the lawn and set up sprinklers
  Why are you assuming I’m not going to paint? Or improve the bathroom?
  You say I need to fix these things yet I shouldn’t be focusing on them? It seems like you’re the one with upside down thinking. They are step one so that’s where I’ll start.
  
  i understand curb appeal and once I get the roof and floor closer to flat, aesthetics will become the primary focus.
  Yes I already bought the grass seed. 👍
  Thank you for the input reminder that I need to make the house pretty, trust me that that’s the plan!
  
  Because of you SoW / budget. Even excluding labor, you are leaving out a lot of line items. We are typically 60-80k for a rehab with labor.
  0 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Marcus Auerbach:
  
  Quote from @Eric Mcginn:
  
  Quote from @Marcus Auerbach:
  
  Eric you are making a classic flip mistake that every contractor makes: you focus on repairing what's broken. The money is made with lifestyle upgrades and looks.
  The things that make a house pretty and don't cost much. You are tackling all the things that cost money and absolutely invisible to the buyer! You are completely upside down in your thinking.
  You have to fix the things to pass inspection, but the money is made with kitchens, bathrooms, flooring. By far the greatest ROI is paint. You will get zero money for fixing the crawlspace jack, even though you'll have to.
  PS: day 1 put weed & feed on the lawn and set up sprinklers
  Why are you assuming I’m not going to paint? Or improve the bathroom?
  You say I need to fix these things yet I shouldn’t be focusing on them? It seems like you’re the one with upside down thinking. They are step one so that’s where I’ll start.
  
  i understand curb appeal and once I get the roof and floor closer to flat, aesthetics will become the primary focus.
  Yes I already bought the grass seed. 👍
  Thank you for the input reminder that I need to make the house pretty, trust me that that’s the plan!
  
  Because of you SoW / budget. Even excluding labor, you are leaving out a lot of line items. We are typically 60-80k for a rehab with labor.
  
  What line items?
  sounds like you’re paying for a lot of labor and management that I will be handling myself. I’m a GC with all the tools and equipment you could ever need.
  but to be clear, this is a 720sq ft house and my budget is $50k
  $25k is just my goal!
  0 Reply
- Marcus Auerbach
  Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
  6mo
  Quote from @Eric Mcginn:
  
  Quote from @Marcus Auerbach:
  
  Quote from @Eric Mcginn:
  
  Quote from @Marcus Auerbach:
  
  Eric you are making a classic flip mistake that every contractor makes: you focus on repairing what's broken. The money is made with lifestyle upgrades and looks.
  The things that make a house pretty and don't cost much. You are tackling all the things that cost money and absolutely invisible to the buyer! You are completely upside down in your thinking.
  You have to fix the things to pass inspection, but the money is made with kitchens, bathrooms, flooring. By far the greatest ROI is paint. You will get zero money for fixing the crawlspace jack, even though you'll have to.
  PS: day 1 put weed & feed on the lawn and set up sprinklers
  Why are you assuming I’m not going to paint? Or improve the bathroom?
  You say I need to fix these things yet I shouldn’t be focusing on them? It seems like you’re the one with upside down thinking. They are step one so that’s where I’ll start.
  
  i understand curb appeal and once I get the roof and floor closer to flat, aesthetics will become the primary focus.
  Yes I already bought the grass seed. 👍
  Thank you for the input reminder that I need to make the house pretty, trust me that that’s the plan!
  
  Because of you SoW / budget. Even excluding labor, you are leaving out a lot of line items. We are typically 60-80k for a rehab with labor.
  
  What line items?
  sounds like you’re paying for a lot of labor and management that I will be handling myself. I’m a GC with all the tools and equipment you could ever need.
  but to be clear, this is a 720sq ft house and my budget is $50k
  $25k is just my goal!
  
  Look, the point of BP is to get feedback and to get better. 25k is not much, but with free labor, maybe you'll get it done. Sounds like you got a great skillset and I wish you all the best with the project.
  0 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  4mo
  Quote from @Marcus Auerbach:
  
  Quote from @Eric Mcginn:
  
  Quote from @Marcus Auerbach:
  
  Quote from @Eric Mcginn:
  
  Quote from @Marcus Auerbach:
  
  Eric you are making a classic flip mistake that every contractor makes: you focus on repairing what's broken. The money is made with lifestyle upgrades and looks.
  The things that make a house pretty and don't cost much. You are tackling all the things that cost money and absolutely invisible to the buyer! You are completely upside down in your thinking.
  You have to fix the things to pass inspection, but the money is made with kitchens, bathrooms, flooring. By far the greatest ROI is paint. You will get zero money for fixing the crawlspace jack, even though you'll have to.
  PS: day 1 put weed & feed on the lawn and set up sprinklers
  Why are you assuming I’m not going to paint? Or improve the bathroom?
  You say I need to fix these things yet I shouldn’t be focusing on them? It seems like you’re the one with upside down thinking. They are step one so that’s where I’ll start.
  
  i understand curb appeal and once I get the roof and floor closer to flat, aesthetics will become the primary focus.
  Yes I already bought the grass seed. 👍
  Thank you for the input reminder that I need to make the house pretty, trust me that that’s the plan!
  
  Because of you SoW / budget. Even excluding labor, you are leaving out a lot of line items. We are typically 60-80k for a rehab with labor.
  
  What line items?
  sounds like you’re paying for a lot of labor and management that I will be handling myself. I’m a GC with all the tools and equipment you could ever need.
  but to be clear, this is a 720sq ft house and my budget is $50k
  $25k is just my goal!
  
  Look, the point of BP is to get feedback and to get better. 25k is not much, but with free labor, maybe you'll get it done. Sounds like you got a great skillset and I wish you all the best with this
  
  I’m moving along.
  everything is going as planned. I’m actually posting some videos from it on YouTube as content!
  
  The scope has increased by a water main but this is CA so it’s not a big deal (only 2’ deep)
  
  Yes I wish I had more time but I’m making reasonable progress to be close to on schedule. Yes my hands are tired and I acknowledge this isn’t a scalable or permanent solution, but I’m still young and strong enough and this FULL flip was the only one in town I could afford without refinancing and complicating things. And every time I drive the 6 minutes to day care pickup I’m super happy I went for one in town!
  
  I’m feeling pretty positive about everything. The neighbor situation is improving steadily, the city has been easy to work with. The house is a manageable size for my solo crew (myself). I’ve had my teenage nephew help several days with labor and today I paid $1100 to get some trees trimmed before I do the roof. But everything else has been me. Demo, house jacking and leveling, rough plumbing, rough electrical, subfloors etc
  
  I’m shooting for $100k profit, and realistically I might just get it.
  
  1 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
6mo
I share the concerns of many of the posts.
Let’s say things go to your plan which is rare, are you being properly compensated for your work and risk? It does not seem like a decent compensation for that level of effort and risk. Do not under value the value of your time and skills.
If you were showing the same profit hiring out all work except for self GC, the profit could be good versus the effort and risks.
I am a bit spoiled. Making a profit is not sufficient. I want great compensation for my efforts, time, and the risks.
Are you adequately valuing your time? Have you estimated how many hours of your time this will take?

good luck
1 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Dan H.:
  
  I share the concerns of many of the posts.
  Let’s say things go to your plan which is rare, are you being properly compensated for your work and risk? It does not seem like a decent compensation for that level of effort and risk. Do not under value the value of your time and skills.
  If you were showing the same profit hiring out all work except for self GC, the profit could be good versus the effort and risks.
  I am a bit spoiled. Making a profit is not sufficient. I want great compensation for my efforts, time, and the risks.
  Are you adequately valuing your time? Have you estimated how many hours of your time this will take?
  
  good luck
  
  I hear you man, but the value of my time isn’t even part of the equation when there aren’t any alternative deals.
  The alternative is I go get a 9-5 job
  And I’m done with that for now.
  Yes I have an unbelievable skill set, I didn’t even mention my MBA!
  I’ve been looking for almost a year now and this is the deal for me right now. I’ll get a better one next time
  
  0 Reply
Bo SmithPro Member
Hinton, WV · Member since 2026 · 1k+ posts · 373 votes
6mo
Real talk -- that neighbor situation is going to hit your ARV harder than you're budgeting for. I've been there. Buyers see problem neighbors and problem properties and they discount based on emotion, not just the math. Your 25k estimate might be generous. I'd stress test the numbers at 10k and see if the deal still pencils.
The hard money cost is smart for speed, and doing your own agent work saved you a lot. But here's the thing Marcus mentioned -- you're right that you need the big fixes (roof, HVAC, foundation). Don't skip those. But he's also right that buyers make decisions on kitchen, bathroom, flooring, and curb appeal. The water heater is invisible to a buyer. New kitchen is not. So your budget strategy is backwards. Fix what's broken to code, then spend aggressively on the things people see.
Your plan to self-do the work is ambitious with young kids and day care drop-off. Be honest about what you can realistically DIY versus what needs contractors. Underestimate your time by 50 percent. Projects always take longer, especially the first time.
How much of the 0k budget are you planning to self-do versus contractor work?
1 Reply
Jonathan KlemmBusiness Member
Moderator
Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
6mo
Congrats @Eric Mcginn! It's really a fun time once you get your license and able to see that hard work and maybe more importantly the money come back to you!
I remember specifically how cool it was for me when I bought my 2nd 2 unit in Chicago and acted as my own agent and used my commission, so I only had to put down 1.5% - WILD!
My suggestion is just stay hyper-focused and do the same thing over and over again!
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1 Reply
Bo SmithPro Member
Hinton, WV · Member since 2026 · 1k+ posts · 373 votes
6mo
Eric, Marcus is spot on with the cosmetics point. You're focused on the structural stuff -- foundation, roof, HVAC -- which are all real and necessary, but those don't move the needle on ARV. Paint, flooring, kitchen/bathroom finishes, and curb appeal are what your buyer sees and values. That's where the money is made.
Your bigger issue though is the neighbor situation with the ARV. You're already planning for a 0k haircut because of them (25k instead of 75k). That's significant. But here's the thing -- if you're bringing in a sub-00k purchase and putting 5k in (not the full 0k), can you still hit 25k? If not, you're break-even or underwater, and that's not a win even if you learn a ton.
The fact that you're agent side AND contractor side is a double-edged sword. You save on commissions, which is great. But agent work and contractor work pull you in opposite directions. You need to be honest about your time. You're doing day care drop off, which means you can't be on the job site every day. That's fine -- but you need a foreman you trust 100%, or you'll have cost overruns and quality issues.
What's your contractor situation looking like? You have a solid GC lined up, or are you planning to wear that hat too?
0 Reply
Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
6mo
@Eric Mcginn, I think you're thinking is just fine and that @Marcus Auerbach and @Bo Smith correct BUT NOT in every scenario as they seem to believe. A few thoughts:
1. If you start with "grandma's house" aka an estate where the owner has passed away. The house was well maintained but woefully dated. EVERYONE will see the potential and EVERYONE including retail buyers will see what needs to be updated.
In examples like this, Marcus and Bo are on point. You are making your money on the cosmetics with a flip. You aren't making any money updating the electrical etc. That is partly because you can't get this house at a steep steep discount. Retail buyers may buy it and not update or not entirely update the electrical and/or may not immediately do cosmetic updates to the whole house.
Basically you have too much competition up front to get a bargain basement price.
2. However, some houses have issues that cut your competition down. Could be roof or foundation issues. It could be fire damage. It could be water damage or mold or something else entirely.
Houses with issues like these may not be fanciable for a retail buyer buying a primary residence. Many investors will shy away from them because they don't have experience with these issues or because they can find easier deals to make money on. So, many times you can get them at a STEEPER discount and your ability to solve those NON-cosmetic issues is what is making the deal for you.
3. It doesn't even have to be a physical issue!!! What if there is a dated "grandma's house" scenario, BUT it has a property line dispute the only driveway to the property.
95% of potential buyers will shy away from it, BUT maybe you have enough legal acumen, are a lawyer yourself, or have a very good real estate lawyer on your team and can address this issue.
With 95% of buyers out of the way, you get this house only needing cosmetic updates for a much lower price then the same house next door without this property line dispute.
You make your money and bring this deal together because of your ability to take on a distressed situation that others cannot or will not.
4. So, yes MANY flippers make money on cosmetics like Marcus and Bo suggest, BUT that is surface level thinking because others can make money by taking on distressed situations others shy away from and they may well make MORE money per deal BECAUSE of it meaning those distressed situations are what's making them money.
Keep in mind the cosmetic flipper's make $0 on the deal from #3 while the flipper able/willing to take on the issue should make MORE than a comparable cosmetic flip because they bought at a steeper discount.
1 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Kevin Sobilo:
  
  @Eric Mcginn, I think you're thinking is just fine and that @Marcus Auerbach and @Bo Smith correct BUT NOT in every scenario as they seem to believe. A few thoughts:
  1. If you start with "grandma's house" aka an estate where the owner has passed away. The house was well maintained but woefully dated. EVERYONE will see the potential and EVERYONE including retail buyers will see what needs to be updated.
  In examples like this, Marcus and Bo are on point. You are making your money on the cosmetics with a flip. You aren't making any money updating the electrical etc. That is partly because you can't get this house at a steep steep discount. Retail buyers may buy it and not update or not entirely update the electrical and/or may not immediately do cosmetic updates to the whole house.
  Basically you have too much competition up front to get a bargain basement price.
  2. However, some houses have issues that cut your competition down. Could be roof or foundation issues. It could be fire damage. It could be water damage or mold or something else entirely.
  Houses with issues like these may not be fanciable for a retail buyer buying a primary residence. Many investors will shy away from them because they don't have experience with these issues or because they can find easier deals to make money on. So, many times you can get them at a STEEPER discount and your ability to solve those NON-cosmetic issues is what is making the deal for you.
  3. It doesn't even have to be a physical issue!!! What if there is a dated "grandma's house" scenario, BUT it has a property line dispute the only driveway to the property.
  95% of potential buyers will shy away from it, BUT maybe you have enough legal acumen, are a lawyer yourself, or have a very good real estate lawyer on your team and can address this issue.
  With 95% of buyers out of the way, you get this house only needing cosmetic updates for a much lower price then the same house next door without this property line dispute.
  You make your money and bring this deal together because of your ability to take on a distressed situation that others cannot or will not.
  4. So, yes MANY flippers make money on cosmetics like Marcus and Bo suggest, BUT that is surface level thinking because others can make money by taking on distressed situations others shy away from and they may well make MORE money per deal BECAUSE of it meaning those distressed situations are what's making them money.
  Keep in mind the cosmetic flipper's make $0 on the deal from #3 while the flipper able/willing to take on the issue should make MORE than a comparable cosmetic flip because they bought at a steeper discount.
  
  You nailed it man.
  literally there are no cosmetic fixers right now.
  and literally I’ve been jacking 200 year old basements up since I was a teen. I’ve roofed a dozen houses and and have done all sorts of electrical and plumbing.
  I wish I could’ve found a cosmetic flip but it just never showed up the last few months.
  Everyone is scared about me doing all the work, but they don’t know what I’m capable of!
  I guess I painted a scary picture for many.
  And thank you for all their concern.
  but I got this!
  
  1 Reply
Bo SmithPro Member
Hinton, WV · Member since 2026 · 1k+ posts · 373 votes
6mo
Eric, Marcus is right about the financial priorities, but he's skipping over something important -- you've got a bigger problem than which rooms to focus on. That neighbor situation could kill this deal, and planning to offer them fence upgrades is not a real solution. I'd spend 1-2 weeks validating whether this property can actually hit your ARV assumptions before you kill yourself doing work.
Here's the reality: a neighborhood dominated by burned-out houses and drug activity doesn't snap back because you paint a kitchen. What are comps actually selling for in that immediate area right now? If your "good" scenario is 75k and realistic is 25k, that's a 0k difference. If your purchase was 25k and your rehab is 0k or less, you're break-even or slightly profitable at 25k. But that means you're taking on execution risk for almost no profit upside. Fires, foundation problems, title issues in that area -- they all seem to show up.
The self-help angle (doing all the work yourself) is seductive on your first deal because you feel like you're saving money. In reality, you're trading certainty for uncertainty. A slower rehab because you're balancing it with day care means a longer hold, which eats your margin. Contractors might overestimate, but at least you have timeline certainty and someone bonded if something breaks.
Before you go all in, are you planning to do a full structural inspection and get multiple comps from that specific neighborhood, or are you working off the overall Chico market data?
0 Reply
- Eric Mcginn
  OP
  Real Estate Investor · Chico, CA · Member since 2016 · 248 posts · 105 votes
  6mo
  Quote from @Bo Smith:
  
  Eric, Marcus is right about the financial priorities, but he's skipping over something important -- you've got a bigger problem than which rooms to focus on. That neighbor situation could kill this deal, and planning to offer them fence upgrades is not a real solution. I'd spend 1-2 weeks validating whether this property can actually hit your ARV assumptions before you kill yourself doing work.
  Here's the reality: a neighborhood dominated by burned-out houses and drug activity doesn't snap back because you paint a kitchen. What are comps actually selling for in that immediate area right now? If your "good" scenario is 75k and realistic is 25k, that's a 0k difference. If your purchase was 25k and your rehab is 0k or less, you're break-even or slightly profitable at 25k. But that means you're taking on execution risk for almost no profit upside. Fires, foundation problems, title issues in that area -- they all seem to show up.
  The self-help angle (doing all the work yourself) is seductive on your first deal because you feel like you're saving money. In reality, you're trading certainty for uncertainty. A slower rehab because you're balancing it with day care means a longer hold, which eats your margin. Contractors might overestimate, but at least you have timeline certainty and someone bonded if something breaks.
  Before you go all in, are you planning to do a full structural inspection and get multiple comps from that specific neighborhood, or are you working off the overall Chico market data?
  
  Bo, I’ve accounted for it all.
  yes, I’ve narrowed it down to the immediate 1/4 mile for comps.
  But you’ve got it wrong.
  
  My worst case scenario is I put in all that work and break even.
  The upside potential is almost $80k
  Those are the numbers.
  I’m going for it. Im not going to get a “full structural inspection”
  Like I said, not my first rodeo. I’ve been jacking up floor joists and crawlspaces my whole life.
  This is why the deal was even available. It’s scary. But not for me. It works for my skill set and physical abilities. It’s gonna be ok 👍
  0 Reply
Garrett CrosbyPro Member
Real Estate Agent · Los Angeles, United States · Member since 2021 · 392 posts · 162 votes
3mo
Congrats on the first flip — using the license to save commissions on both sides is exactly the right move for someone starting out in CA. That $12K in hard money costs is real money on a tight deal, so I'm glad you mentioned shooting for $25K on the reno rather than $50K. In my experience on CA flips, the biggest cost surprises come from HVAC replacement (permits, inspections, sometimes a full system vs. just a unit) and roof scope creep. Get detailed bids on those two items early — before you close if possible — because they can move significantly.
The neighbor situation is the one I'd watch most carefully on the ARV. You're right that it'll affect comps — buyers and their agents will see that shanty shack, and in CA, disclosure obligations mean you'll be documenting it. The fence idea is smart if it helps visually contain the issue. The $225K target assumes buyers don't apply a meaningful discount for the neighbor risk, which may or may not hold depending on how the street reads when you're done. Worth pulling comps on properties near similar situations to calibrate the discount buyers have historically applied. Good luck — this is the kind of project you learn more from than a turnkey deal.
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