First Flip - 28% ROI, We'll take it

[Matthew Taylor]

Purchase Price - $85,000

Rehab cost - $60,000 (5 month duration)

List Price - $225,000

Sale Price - $223,000 (received offer within 8 days of listing)

Sales price less closing and commissions - $200,000

Profit - $55,000 split between the two of us

Property was a 2 bed and 1 bath with around 1100 SF.  We enclosed another 100 SF that used to be a patio and stored the washer and dryer.

Rehab went over the original estimates but included some value add changes. Rehab took longer than we had hoped, as is often the case. Definitely learned plenty of lessons but we were still able to clear a solid profit.

I have read numerous times that you have to "buy right" and "you make money when you buy". This project opened our eyes to how true those cliches are.

Background:
A co-worker friend of mine and I had been discussing real estate investing. He was presented a property by a local agent. The property was located in one of the most sought after retail areas in Memphis. The house was occupied by an elderly person and was significantly outdated. My friend made a very low, cash offer on the property. He was planning to use personal funds and a private loan from a family member to fund the project. Somewhere between looking at the property and the owner accepting the offer, his personal loan backed out. He told me the situation and the offer amount. I told him we would find the money and make it work because it was great location at an even better price.

This was an awesome experience that taught us several lessons and earned us a tremendous profit. We are looking for our next opportunity property.

[Matthew Taylor]

@Samir Shahani I used net profit/all in cost.  Actually should be 38% not 28%.  Typo on the post.