All Forum Posts by: Max S.

@Jay Hinrichs. And all.  Just wanted to finally write the post I said I would after I completed my one and only retail flip through flipsystem.  

Unfortunately for me, Jay, you were right.  Retail flipping homes is high risk.  

Recap - I joined FS in 2023 with intent to flip many and generate more $ to invest with. started in cleveland market with no luck and switched to cincinnati market (where I live).

Bought off market 3/2 cape cod for $102k in cash 10/2023. Seller wouldnt turn on Utilities so couldnt check major items. Rehab estimated at $63K. ARV of $210-$215k. So it appeared to be a solid deal.

Well, there were many costs that just piled up over the rehab timing.  like, drain lines that needed clearing, a water leak, having to switch to a 3/1.5 due to the odd layout. replacing AC unit (not factored into above rehab number), replacing Furnace (not factored), replacing roof) not factored, demoing and painting basement (not factored).

Time also played a factor as the contractor was not good.  Lucky though for me I am local and could go over and check all items after complete.  I had to tell him many times to fix items.  

Rehab started OCT but didn't finish until JUNE 8 mo later! GC said 4 months initially.

By June i'm at $183k spent. I used HELOC so interest only payments continue.

Staged and listed and got a Ton of attention.  Excitement was high.  Accepted offer for asking $210K.  Inspection back with whole slew of items.  Buyer wanted $15k in items/credits, I denied as there was so much attention I thought for sure I could find a better offer.  Back on market and lots of showings but no offers until mid July (cash institutional buyer) Offer of $204K but they wanted $20K in reduction after inspection. 

Meanwhile I replaced roof (many buyers kept mentioning it so vs doing credit for same amount I just replaced) so total spend up to $188k with HELOC juice and half year tax payment.

More showings, dropped list price to $204K , no offers until 10/2024, $204K but again wanted many repairs and the aluminum branch wiring  was the exit reason due to "insurance".

At this point I am not happy with agent (Do not recommend Howard Hannah) and I ask to release contract as I need to drop price and their commission is keeping me from profit.  Well, they said sorry bud you signed a 12MO contract (lesson again learned to not ever signed an agent contract for 12mo) and they wouldnt release me so I just rode it out until contract was over. 

I list FSBO in JAN 2025 through Homecoin(great site) $179500 offer came in a few days after list for list. Inspection requests were minimal but they wanted closing costs paid so it went through and sold in FEB.

All in $190K and came home with $165K. So $25K lesson learned. (I did not want to BRRRR or sell turnkey I just wanted out as I was afraid the bad rehab was going to cost me long run)

After all this, If I could have advised my self before getting into flipsystem, I would have said, Do not do this.  I would have said, go to your local Real estate chapter and ask the leaders who in the group is the best at what you are trying to do in your area.  Connect with that person or persons and offer to pay them to learn it all or try your best to learn from the RE meetings.  They might offer up the knowledge for less than you'd think.  I do get it thought that the point of FS is to not have to do any of that (education, finding people, finding teams, vetting teams, etc) and just have it done for you asap.

What do I think of Flipsystem?  The education and calls were good, the team they told me to "trust" in my market was bad.  Maybe it's just me and my experience in Cincinnati though as I cant say anything about the teams in other markets. I do see though, if the teams were better in my market FS would be a good program.

Did I take on too big a project for my first retail flip? I think so, but the FS team led me to believe I could make it happen.

Did I learn valuable lessons, absolutely.  Should I have listened to @Jay Hinrichs absolutely LOL.  

Yea I would want it paid back asap too so not sure how best to utilize it other than BRRRR type as cash to not have to season much if I find a low refi seasoning lender.. but also need a team that can BRRRR well and I'm just looking for a more simplified solution if it exists!

$100K cash and up to $300K HELOC variable interest only payments (prime +.25). Looking to learn some great lower risk strategies for those that want to share! I own and manage 3 short term rentals, and have done for 3 years ($50K gross profit each year across them). Not interested in flipping. I could buy a large STR in my market DSCR but looking to diversify! Happy to trade my STR knowledge for those that want to Private Msg! Target timeframe of 3-5 years. Annual Appreciation 3%+ target. Self managing an option but a PM option is cool too! Happy to discuss partnerships as well.

Hey , yea thinking more on this, having other positions would be a tough sell.

My strategy for substitution of collateral is to get better debt terms on an investment I want to buy.

Ex. I find an investment property that cashflows ok if I get bank financing. But I am savvy and want cheaper debt. Seller of said property is not willing to do terms.

I go forth into the MLS or elsewhere and find a seller on any type of property willing to do the terms I want AND is ok with me selling their property and substitute the collateral with another real estate asset of same/more value. Preferably low or no money down as best seller would be one only interested in the monthly income

I then sell said first property and take that cash to buy the investment I am really wanting and I get the terms I want.

only thing I don’t know about yet is, how to dodge the tax on the sale of the initial property?

Evan! I know it’s been some time but interested if you’ve used this strategy?  Yes what you’ve mentioned is accurate. The minute things are what I see as the hardest to execute like getting sellers to want to work with you. But interested if you’ve found what works?

Hey Brother, 

We've run our cabin in Pigeon forge for 3 years, consistent $90-100K gross rev.  My advice would be for sure to become a part of the FB group Short Term Rental Listing Advice through the Short Term Shop, Also become a part of the STS community and ask questions there and you will get a boost!

hey!

Yes I did, and I am currently going through a retail flip in Cincinnati, planning to be done next month and sold asap. I will detail my entire experience here once complete!

Hey!  Sorry for not providing much on updates! I’m currently half way through my first flip in the Cincinnati market, it will be a retail flip (no tenant just sell to homeowner).  

All is going smoothly thus far so I plan to give a full report of experience and numbers once sold! Expected sale in Jan.

Correct some like me need more time, and yes they extended my contract to 180days as they are pushing for success!