First Rehab Flip By Former Contractor

[Corey Dutton]

In the Spring of 2015, a newbie real estate flipper named Terry approached me for a loan on a rehab. Formerly a contractor, this real estate investor desired to enter the “flipping” space and had identified a great candidate for his first “flip.” Before meeting Terry at the house he intended to buy for his first real estate rehab, I decided to drive around the neighborhood first and look at the comparables to the subject property. Pulling into the driveway of the subject property, my first impression was that the property had a long way to go to be close to the comparables I had just seen. There was a carport that was falling down at the end of the driveway, and next to it, an old garden shed that was also pretty dilapidated. The yard was full of weeds and there was a huge, overgrown lilac bush in front of the house that was completely blocking the front door. The entire house needed repainting and the yard certainly needed some attention. Luckily, the interior of the house was very clean and needed mostly ‘lipstick’ and some staging. I had definitely seen worse rehab houses than this one, but started to wonder if this “former contractor” would be able to transform this house into something like one of the comparables in the neighborhood without breaking the bank.

I breathed a sign of relief when I opened a folder that he brought to our meeting that contained a portfolio of similar projects he had completed in recent years. Some of Terry’s previous projects were remodels for homeowners. We discussed the possibility that he may go over budget on this project. I explained to him that this project was not a “retail remodel” that he was used to doing for homeowners, but rather a “low cost remodel.” He assured me that he was going into this rehab project with eyes wide open, and this meant saving costs. We gave him a hard money, rehab loan and he closed on the property within 3 business days. The weekend following the closing, Terry had already started the demolition.

Four months later, I received a call from Terry and he had completed the rehab project and invited me to come and see it. When I pulled into the driveway, I just about fainted. The house looked nearly identical to one of the comparables I had seen four months prior in the neighborhood. The color schemes, the clean landscaping, and the staging on the interior really made this house stand out. After being listed for only 7 days the house was under contract with two back up offers! Just love how this “first rehab” turned out, and so proud of Terry for transforming that house. What a success story!

Posted by Corey Dutton, Hard Money Lender