Diary of a First Time Flip

[Navi Veski]

This thread is going to be an account of a real estate rookie looking to find, fund and rehab a residential property in the MD/DC/VA area. In this case, my first property is likely to be one that's been referred to me by a neighbor so the "find" part of my effort may be truncated. I will be looking for a hard money or private lender to fund the project while I serve as the GC and manage the project. I've retained the services of an expert GC to provide me with direction regarding the process. He is a seasoned local contractor with over 10 years of experience.

As I continue, I'll be detailing my negotiations with the homeowner and discussions with potential funding sources. Although this could be a very short-term, high-yield deal, I'm less excited about the profit and more excited about learning/creating a process that I can use over and over again.

Your questions and critiques are welcome as I crawl through this new maze and then start to "walk."

To the Good--!

[J Scott]

Deal looks reasonable with those numbers, but I'd make sure your Fixed Costs are inclusive of all your Purchase, Holding and Selling Costs -- $25K seems a bit low for a $350K resale.

Keep in mind that you'll likely have 5-6% in commissions, 1-2% in concessions, 1-2% in holding costs, 1-2% in closing costs and then your loan costs, which can run anywhere from 1-10%, depending on the typical financing and the duration.

I like to assume 10% of my resale price for Fixed Costs, and that's assuming no loan costs -- it's generally a bit on the high side, but not by much.

Just something to keep in mind...