A flip... that could have gone better

[Andy Robison]

Well I've been quiet for a while in these parts. Jumping through several jobs while trying to maintain Real Estate has been a challenge eventually had to step back from trying to grow. End of last year I was bored collecting rent from the two properties that I have bringing in a whopping total of $1200/month cash flow. Not nearly enough for me but it was nice to have it, while various contracts that I was picked up on were canceled or short terms. So that brought me to the path of I wanted to flip my first house. I need more capital if I want to expand my buy and hold side of the house so...
So I found the first property that would be a good first flip.... Boy was I wrong (kind of). Lets get into the numbers and my mentality going into this property. Purchase price was 60k Purchase, 40k rehab and I estimated 150k ARV.
Numbers look good right? 50k profit, lets do paper napkin math and say 30k after holding costs and other things that were more expensive than I thought.
Where everything went wrong.

1) Contractor
During this flip I worked with a contractor that was suggested to me by another investor in the area for quality of work and speed that he was able to do said work. I had spoken to past clients, did my due diligence or so I thought. Was given a 45 day max timeline for the work to be done, kitchen bathrooms, flooring, paint and plumbing work. 45 days quickly turned into 75... Holding costs climbed, rehab budget ballooned from the original 40k rehab went north of 50k. Still enough meat on this bone to make it worth it, especially for my first flip. 

Lesson 1. Stay on top of your contractor.

2) My numbers.
Even after everything was said and done and headaches that I had with the contractor. In all the numbers I had I missed one very important thing closing costs. Those quickly add up, I mean really they add up. (lesson learned) Then there were small things like repairing a fence. Contractor quoted me at $2000 for that. Ended up doing it myself for just shy of $800 plus a few weekends. Just a bunch of small things added together $100 here and there... the AC stolen during rehab.. I did not keep track of my numbers close enough.

Lesson 2. Track all your numbers. Big spread sheets, everything keep track of it and review it every day.

At the end of the day I could have done better. I learned a bunch doing this and my grand vision of having an easy 30k to spend on another flip+buy/hold did not pan out. I ended up around $10k profit for this house, set the market price for the neighborhood and fixed up an abandoned property and sold it to a wonderful family for their first house.

Lesson 3. Real estate is a constant education, any education that pays you is worth the time invested.

I did not make a ton of money on this house, but for a first flip that I learned a lot on, took some lessons from and a little bit of cash. I am now better suited to flip my next house. Which I've got to go and give my earnest deposit check here in 10 minutes.

Happy Investing everyone!