Metro Detroit Flip w/ pics $700 invested 105k profit

[Chris Iley]

Investment Info:

Single family home in metro Detroit

Purchase price: $121,000

Rehab Costs: $45,000

Cash invested out of pocket: $700

This was my very first flip! I did 95% of the rehab and I'm really thankful i took a chance on myself and have the confidence to go through the entire process while getting a first hand education on all the stages from trying to get a HELOC for financing, buying the property and holding costs, the rehab process and dealing with the city, selling and all the fees/taxes associated.

What made you interested in investing in this type of deal?

The home was the largest by square footage and cheapest home in the region i was looking in.  The home was vacant, neglected, dirty and had several leaks in the basement, water damage in multiple areas inside and a list of code violations from the city.

How did you find this deal and how did you negotiate it?

I saw this on realtor.com as bank owned, it was on the MLS, on a Wednesday and drove by it right away. Asked a friend of mine who is a real estate agent if i could go see it, but during Covid they weren't really letting people tour houses. So we just wrote a full price offer contingent upon inspection. The bank said we could go look at it, rewrite the offer without the contingency and they would accept. Looked at it Friday and Saturday we rewrote the offer and it was accepted.

How did you finance this deal?

I used a HELOC i had just qualified for. I used that to pay cash for the deal and was able to close in under 3 weeks. I paid for all the materials with the same HELOC and i performed all the labor.

How did you add value to the deal?

I updated the entire home.  I installed custom looking kitchen cabinets and granite, installed recessed lighting and multiple custom built in's.  Refinished the hardwood floors, all the electrical and plumbing fixtures are new. The entire house was repainted. A "flat" section of the roof was completely redone. I took the deck apart, re-leveled and installed brand new decking/rails.  I also did significant landscaping improvements.

What was the outcome?

After 6 months listed for $265k, had 23 showings in 2 days. 5 offers, 4 came back with highest and best. Accepted 270k no contingencies. 270-166= 104k gross profit before taxes/fee/commission. I paid less then $700 out of pocket total. Just HELOC interest payments. A grand slam as far as I'm concerned.

Lessons learned? Challenges?

I really learned the flipping process and looking back i made a few costly errors when it comes to efficiency .  Next time i would do all the structural, then all the  plumbing, then all electrical and so on...rather than room by room which was how i tried to do this flip.  I saved every receipt and logged it in a spreadsheet each week, but then i started looking at each receipt as a function of time.  How much time did i spend or waste each trip  i had to go get this or that. In a business where time is money, 100+ trips to Home Depot is a very inefficient way to operate.  I did 95% of everything, so it can be overwhelming and stressful, but figuring out how to overcome obstacles and reaching new milestones was even more rewarding.