Newbie in Phoenix, AZ (Arcadia/Biltmore)

[Sam Grooms]

My wife and I recently left our careers to pursue real estate investing. I'm a CPA, and she was a marketing manager. We first got the real estate itch when we bought our first house 2 years ago and turned our carport into a garage, installed some french doors, enlarged some windows, and remodeled the exterior of our house. We did all of this ourselves, from plans, to permits and electrical. You name it, we did it. 

We want to start with fix and flips, due to the larger returns in our area. The long term goal (5+ years) is to use the profit from this to buy rental units and switch to passive investing. 

We want to focus on the Arcadia/Biltmore area of Phoenix, since that's where we live and the area we know the most. My wife left her job in November to get her real estate license. A month later, we bought our first rehab property for $360K. Our plan is to completely gut the property and double the sq ft. Our renovation budget was $230K. We started doing demo on the weekends, and soon had a list of friends that wanted to help out every weekend. Our original plan was to hire a general contractor, but in late January, I decided to also leave my career and be the general contractor myself. My uncle, who is a general contractor, lives about 45 minutes outside of Phoenix, and has offered to mentor/train me. I offered to give him 20% of the profit, or $3k/month for 2 days a week of help, but he insisted that it wasn't necessary. Family is great. Our new renovation budget without hiring a general contractor and doing a lot of the end work ourselves, is $160K. 

It's been about a month since I've left my job, and I'm so glad I made that decision. The house has been completely gutted (filled four 40YD roll off dumpsters), except for the roof (which we are removing and re-framing). We've had numerous issues come up, and our budget would have taken a hit had I not been able to address them myself. The first issue was when we removed the ceiling. The attic insulation was unlike anything I had ever seen. After a few hours of research online, I found out we had vermiculite, which has a 2/3 chance of containing asbestos. I had an asbestos abatement company quote be $12K for removal, so I decided to learn how to remove it myself. After more research, I purchased all of the required gear, and learned how/where to properly dispose of it. Four of us knocked it out in about 3 days. 

The second issue came up when I started researching our setback requirements. Our addition is within the setback minimums, but since we're within 2ft of those limits, we had to have a surveyor come out. We finished that last week, and provided the topo to our architect. My biggest regret so far is not getting my architect involved earlier. I had no idea it would take them 3-4 weeks to prepare plans, and another 4 weeks for city approval. I was issued a permit for my carport to garage conversion the same day, so I made the horrible assumption it would be a similar process. We could have our permit in hand already, had I started that process before beginning demolition. 

We finalized our project timeline today, and hope to be finished by the beginning of August. We are taking our time on this first flip to learn as much as possible, and get our process down. We were able to fund it ourselves, so our only holding expense is opportunity cost of the cash. After this first one, we plan to use private funding to be able to do 3-4 at a time. We are focusing on a higher price point, with fairly high margins, so we think that will be enough for us for now. 

As for how I heard about BP, a friend who has been helping me daily with the project, send me a link for a podcast. It was episode 2XX of the BP podcast, so I decided to not listen to it, and instead started at 001. I'm now on episode 022 and loving all of the advice from the guests. 

Any advice from fellow BPers would be greatly appreciated. I'm also looking for a mentor in my area that can steer me clear of any common pitfalls. 

Thanks!