Hey BP, I had a member contact me and ask my experience and any knowledge I could pass on. I decided to give a detailed breakdown and notes of both completed projects as well as some information on what I learned.
If the numbers make sense and there's a safe margin for error I'd say get moving on a project and get hands on experience. I would add that getting started with a mentor to guide you through the process would be beneficial. I am currently looking for someone to teach me the direct mail process and a more professional method for remodeling so I can accelerate my learning curve.
Here is a detailed breakdown of my two properties start to finish.
My first deal was a home I purchased from a friend's parent's with a partner (their son) while still in college spring 2012. The home was originally worth $160,000 but it was deemed to be a sinkhole property. We had the report analyzed by a Geo-tech company and was confirmed that it was clay not a sinkhole that shifted the foundation. We purchased the home for $25,000 cash (the insurance company already paid the homeowners the full value of the house) and did a live in flip for a few months. We split the garage in half to add an extra bedroom. We then rented two rooms out (master and garage suite) while occupying the remaining two rooms to cover expenses. After about a year my co-owner and I moved from the college town and rented the home for $1600/mo. We still own and rent the property 100% debt free. We're interested in pulling a line of credit on the home, but the sinkhole label has made it difficult.
Property breakdown:
Address: 1940 SW 9th pl Gainesville fl 32601
- 4/2 on corner 1/4 acre lot fenced in back yard walking distance to UF and hospital
Purchase price $25,000
Rehab cost $5,000
Monthly Gross Rental income $1600
Monthly Expenses: $620
- Property management $140
- Taxes $100
- Insurance $50
- Repairs $50
- Yard care $80
- Cap Ex fund $100
- Vacancy fund $100
- Debt service $0
Current tax assessment $90,000
-Rented to 4 students with parents as co-signers (same renters from beginning never missed a payment, late a few times due to banking error)
My second deal was a home I bought for my wife and I to live in while we raised our first child, and Oops our second. The home was initially on a rent-to-own contract we set up with my wife's uncle. We paid $500/mo and the taxes while renovating and agreed to buy the home for $88,000. My wife was added tot the title before I started working on the property . I began the renovations June 2015 and finished September 2015. The initial rehab budget was $25,000 for what was assumed to be light rehab of kitchen bathroom and floors, but once we began demo we quickly realized there were mold issues, faulty wiring, and a slew of plumbing issues. Her uncle decided against carrying the note and we didn't qualify for traditional financing so my father loaned me 100k privately to purchase the property in November 2016.
We are renting this property to my wife's sister and her family for $1,300/mo starting June 1, 2017. The market rent for this property would be in the $1,600-$1,700/mo range, but they will be paying all expenses and dealing with any repair under $100.
I did majority of the labor and brought in subs to run electric and plumbing. The remodel cost around $65,000 (including main contractor stealing around $5,000). I purchased cabinets from IKEA, made my own vanities from prime lumber and fabricated concrete counter tops for the kitchen and both baths. Majority of the demo, work prep, material purchasing, and project oversight was done by myself. I hired handymen for basic carpentry and labor assistance. Of course my neighbor moved in just as I finished the project - they own one of the largest plumbing companies in town ...
Remodel included :
Kitchen: $6,500
- IKEA cabinets $3,500
- sink and faucet $750
- garbage disposal $350
- counters were concrete and fabricated by myself $1,000
- wood trim finish $500 (opened up the kitchen pillar and island)
- coffee bar $400
- appliances were re-purposed from my fathers rental (free) valued at $3,000
Main bath: $3,300
- over-sized jet tub $600
- vanity $750
- lighting $200
- toilet $250
- shower tile $750
- Instant hot water (main house) $750
Master bath: $4,200
- Glass shower $1,000
- Vanity $1,000
- Instant hot water heater $500
- toilet $200
- lighting $500
- tile $1,000
Master suite: $4,550
- Split unit A/C donated by neighbor, install $500
- Kitchenette $1,000
- Fridge $100 (craigslist)
- Engineered beam $1,000
- lighting $1,200
- Custom door $750
Demo/Hauling: $2,500
Flooring: $9,000
- Wood plank tile in whole house (2,000 sqft) $2/sqft material $2.50/sqft labor
Plumbing: $10,000
- main bath $2,000
- master bath $3,000
- kitchen $2,500
- water system $1,000
- kitchenette $500
- miscellaneous $1,000
Electrical: $9,000
- main panel and sub panel $2,500
- House rewiring $2,500
- Can lighting $2,000
- Well pump wire $500
- Miscellaneous $1,000
Drywall: $3,500
Professional paint interior: $2,000
Water system: $5,100
- softener $2,000
- carbon tower $2,000
- Reverse osmosis $600
- Pressure tank for well $500
Back deck $2,000
Insulation $4,000
- Sheds $2,000
- Main bedroom $2,000
I'd like to note that I would not have renovated as thoroughly or with same high end materials if this was a pure fix and flip. I could have kept cost around $40,000 with a higher emphasis on curb appeal and functionality as compared to custom design and expensive finishes. That being said we did a complete gut job, added a bathroom and about 700 sqft of living space under air.
Address: 360 8th ct vero beach fl 32962
1/2 acre lot, fenced back yard, 2,000 sqft under air, 400 sqft work shed, 100 sqft storage shed
5 min drive to beach, centrally located in town
Purchase price $88,000 + rehab cost $65,000 = $153,000
Current comps $180,000-$200,000
I am currently about to begin a direct mail campaign to find fix and flip properties in Vero Beach FL ARV 150k-300k. If anyone has experience in this field close to Vero I would love to meet up and see if I can provide some value in exchange for knowledge and advice. I am ultimately shooting for multifamily buy and holds, but the market just does not support those numbers at this point.
