I'm going to start on my first flip on Monday. I want to post all of my pre-flip numbers here so they are etched in digital stone so I can refer back to them when all is said and done. I'll explain my methods to arrive at the numbers below. I'll do a separate before and after photo montage. If experienced flippers have suggestions as to where I can cut costs or make improvements to my plans, feel free to fire away.

My goals are 1) don't lose my investor's money, 2) learn a lot, 3) make money for myself.

This flip I am going to start actually came on the market about six months ago. The seller's agent didn't enter the property properly into the local MLS so when you searched for either SFH or duplexes, the property never showed up. The listing is actually for two separately deeded properties, one SFH and one empty lot. The original asking price was $36k.

When the property was dropped to $29.9k, I decided the property was worth a visit with my Realtor. The property needs some fairly standard improvements: fully updated kitchen (existing is old 1950's era metal cabinetry), refinish floors, painting, reconfiguration of the 2nd floor bathroom and moving the laundry room from the nasty 4.5' tall basement, up to the nicer 1st floor.

I used zillow to find the three most recent sales, on the same block and arrived at an ARV of $85k. Because I arrived at the ARV myself and not through my Realtor, I chopped 15% off of my proposed ARV, dropping the potential sale to $72,590. With 30% margins, my max cost to rehab is $50,813.

Please note: I try to be conservative (ie high) on my rehab costs. I'm a contractor as my day job, so I have some idea of local pricing. That being said, even contractors can be 'low' on their estimates.

Kitchen Cabinets: $1,725
Counter top: $6,480
Appliances: $1,350 (range and dishwasher)
Minor electrical updates/repairs: $1,000
1st Floor refinish: $3,600
2nd Floor carpeting: $1,500
Bathroom Update: $1,500
Painting: $750
Heating System*: $1,000
Labor for the above: $6,720
Contingency: $2,563

Purchase price: $25,000
Rehab costs: $28,188 (Including contingency)
Total Investment: $53,188

Holding costs @6 mos: ($2,150)
Closing costs: ($5,978) (7% of Comps value, ie $85k)
Net profit: $72,590 -$53,188 -$2,150 -$5,978 = $11,275

*The owner let the building freeze without winterizing the house (claimed and screamed that the house had been winterized, so don't worry about the pipes). Anyway, one of my contingencies was to include a warranty for all domestic water and heating pipes and appliances. The seller agreed. After the polar vortex left the North East, we went back to the house. There was water all over the basement. The seller got the domestic pipes back in order and claimed the boiler was fine.

How would a boiler freeze? The seller had decided to not keep oil in the house, so the boiler ran out of oil and the cast iron heat exchanger froze. Cast iron doesn't stand up to thermal shock or stresses well, and the HX cracked. I'm supposed to close on Monday at a cost of $23,k and was at the house today (Saturday) to verify everything was dry. The boiler was dripping water, just as I had predicted. The deal looked to be off as the seller told us she would only credit $300 if we found any other issues.

I asked my Realtor to let the seller's agent know that if the seller would drop the price $5k for me to put a new boiler in, I would still close on Monday. The seller relented and dropped the sales price to $18k. My sub gave me a cost of $6.5k for an oil-to-gas conversion. So the $1,000 in my budget plus the $5k from the seller plus $500 from contingency should cover the new boiler.