Ranch House Flip - Progress

[Steven Tankersley]

Hi all,

I've bean a long time lurker, and finally had the right opportunity to jump on our first flip. Background - I own a residential construction company, and I am also a licensed Realtor. This project came to me from another agent who contacted me regarding a renovation estimate. While I was not interested in the renovation work due to the condition of the home, I did make an offer which was accepted. This is a 2,200 sq ft single story ranch home, 3 acres, built in 1987 with a barn and shop. 

Purchase price: $410,000

Renovation estimate: $95,000

HM & closing costs: $44,000

ARV: $649,000

Net projected profit: $100,000

The deal is structured with a 50% partner. He is also a Realtor, and he put up the capital for the downpayment (13%), points (3), closing costs, monthly payment, utlities, taxes. My contribution is the construction, which we bill weekly for costs incurred (time and materials). Our hard money loan includes a $95,000 holdback for construction costs. 

This property was BAD! It was a true hoarder property, garbage to your knees. The smell is undescribable - a mixture of feces, urine, dead rats. Our first order of business was to clear the property out, remove all interior items, windows, and most of the drywall and siding to let the property air out. We have significant dryrot, and are re-siding the house. We will have new ducting, new attic insulation, new siding, windows, all doors, all cabinets, drywall, paint, flooring of course. It will be a beautiful home with no corners cut. Total project schedule - 8 weeks.