All Forum Posts by: Caleb Rigby

Thanks @Bill Goodland. The actual hard costs of not evicting immediately weren't necessarily large ($500-1000), but it's the soft costs that hurt me - the eviction wasn't final until Sept 1, which means I didn't complete the rehab until the first week of November. Selling in the dead of winter (in UT) is not ideal. This probably cost me $5-$6k just by not having the house up for sale in the peak time of year (before school starts). 

@Adam Juodis, thanks. I didn't do any of the work myself, besides removal of some of the tenant's leftover couches, mattresses, and chairs. I hired a GC that came highly recommended from another local investor. He's the type of guy that has done it for so long that he's 'got a guy' for everything in the house. I feel pretty lucky that I was able to build a good relationship with him from the start. I speak a little Spanish and he speaks OK English, so we get by :)

@Dario Contreras, I'd rather be in FL this time of year. My little brother used to live in Bunnell so I know how awesome those beaches are.

@Mark S., great advice, I will look into that. Thanks for sharing.

I posted a video of the initial walk-through but apparently it got removed :) Here are a few of the before pics:

and wanted to show before/after of the bathroom too

Thanks @Mike Gallagher!

@Ira Ashton, @Charles Doehler, I got this one from a wholesaler. I'll PM you his info.

@Samantha Magina, so I should have explained a littler better. I changed jobs in 2015 and at that time, I rolled my old traditional 401K into a Roth IRA, so I elected to pay the taxes for that distribution at that time. So, the complete distribution I made in 2016 will not be taxed since I had already paid the penalties.

@Rebecca Belnap, I had decided on navy blue but my wife talked me out of it. I agree it was gutsy, but we wanted something that popped.

@Kyle Kapp, 1904, 2100 sq ft, 4 bed 1 bath. We were nervous that it wouldn't appraise/sell for $140k+ since it only had 1 bath, as there were basically zero comps in the surrounding neighborhoods that sold for as much with only 1 bath, but I think that just goes to show how good my contractor did.

I learned so many lessons on my first flip. I bought this house in July 2016 from a wholesaler in Ogden, Utah. I wanted to share some of the most valuable lessons in case they helped someone else out in their real estate journey. First, let me share the numbers and pictures with you. Then I’ll get into the nitty gritty:

Purchase Price: $60,000

Materials and Labor: $46,319

Holding Costs: 2,371.50

Final Sales Price: $141,000

Closing Costs and Commissions: $11,082

Total Profit: $21,228

My real estate journey started about 10 months ago when I began listening to the BP podcasts. I had always loved watching the flipping shows, but never thought I'd have the guts to actually do it myself. I listened to podcasts for a couple months, attended some local REIA meetings, and networked as much as possible to learn from those that were doing it. I then cashed in my IRA, got a HELOC on my house, and made the decision to just jump in and figure it all out.

I’ve told many people that I probably bit off more than I should have on my first property, but looking back now, I wouldn’t have it any other way. Here are my biggest take-aways:

Lesson #1:

If you have to evict tenants, then do it ASAP. When I closed on the property, I went up there and was genuinely nice to the tenants (had been there 6 years, but were on a month-to-month lease). The place was trashed, so I should have assumed they would be difficult to deal with. I believed them when they said they’d be out by a certain date, but: (a) that didn’t happen, (b) they didn’t pay me for the 1-month rent, and (c) they left ALL of their crap. Lesson learned: begin the eviction process ASAP and let the professionals do their job.

Lesson #2:

Learn how to estimate rehab costs. I went in to the remodel with a $35k budget, and blew that out of the water by spending an extra $11k! That could have killed another project, but thankfully there was a lot of room in the deal so I could make those mistakes on my first project and still make a profit. Things that cost more than I anticipated: Windows, interior doors, labor (in general), and cabinets/countertops and pretty much everything else. Lesson learned: spend more time at Home Depot/Lowes if you aren’t sure and make sure you have a better grasp on what materials will cost.

Lesson #3:

Stay up to date on current comps. This is one thing I knew was important and I’m really glad I was proactive. There was about 4 months between purchase date and listing date (took 1 ½ months to evict) so the market could have changed drastically during that time frame. I asked my Realtor for comps (sold/under contract 180 days back) each month during the process so that I could keep my finger on the pulse of the Ogden/Weber County market during the renovation. I initially listed it at $147k, but after 2 ½ weeks of zero offers we decided to reduce to $141k and that’s when things really picked up. Lesson learned: know your market really well when you’re purchasing a house but even better when you’re listing the house. Don’t get too greedy. The faster I can close on this property the faster I can move on to the next one and put my money to use.

Here are some before/after pictures of the rehab. My 2nd flip will be sold in two weeks and I’ll post about that once it’s final. My goal is to do 5 more flips this year. 

After exterior:

After living room:

After kitchen:

Welcome to BP, @Ann Alleman! There are a lot of helpful investors from Utah on this site. I would suggest going to some REIA meetings and lunches. Also, Jeff's wholesale meetings are fantastic as well. Good luck!

@Mike Palmer, Long story but no, I passed on it. When I got inside the house, the previous owners were kind enough to essentially disassemble the entire kitchen before they left – they removed most of the upper cabinets, tore out the granite countertops, and removed the sink. The backyard was full of weeds and it didn’t look like grass had ever been planted back there. The basement was 100% unfinished, which while not bad, was different than I had been assuming in my modeling of the projected returns.

I shopped the deal around to 4-5 guys that buy a handful of properties in Weber/Davis Counties and no one wanted to bite at that price. I just checked and it is back on Auction.com. If I could have gotten it for $240k instead of $266k, then I could’ve done something with it.

Lesson learned: Assume the worst if you’re buying a house sight unseen. If it’s not as bad as you had planned, then you’ll have more profit then you were planning on. I’m grateful I’m not out any money to learn this important lesson. 

@Ira Ashton, like my momma always said, you can never know too many good GCs :) I'd love to have you up north the next time I'm walking through a potential flip. I've got your number in my cell phone and I'll ping you soon.