My Best Fix & Flip Yet!

[Carrie Alluri]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $230,000
Cash invested: $42,400
Sale price: $395,000

My sister and I went in on this deal together since she found the contact through one of her friends. This is obviously my best deal yet! The owners did very few improvements to the house over 25 years except getting all the mechanicals updated within 10 years of selling to us. This saved us a big expense. All the improvements were cosmetic. We hired out the rehab work we didn't want to do. The rest of the work we did ourselves and had a great time!

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

The owners wanted to sell quick and just wanted enough money to cover what they paid for the house. This made for a great fix & flip deal since the market was so hot at the time and interest rates were low. I knew I could sell it quickly and for a large profit.

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

My sister's friend told us about this couple and their house. We went a looked at it and verbally negotiated the price based on an appraisal the owner had gotten.

How did you finance this deal?

We took out a hard money loan with a lender based out of California. I don't recommend using a lender from California since that state has not simplified their load documents like IL has and the loan package ended up being over 100 pages long! The title company was not happy reviewing it all.

How did you add value to the deal?

We updated every cosmetic aspect of the house in some way. This involved just painting to laying new carpeting and removing a silly half wall between the family room and kitchen.

What was the outcome?

We finished all the rehab in 4 months (right on schedule) and got it under contract right before the interest rates started to rise. After holding costs, rehab closing costs on both ends of the deal, we ended up with about an $83K profit. Not bad for 5-6 months of work if you consider the time for loans to clear too.

Lessons learned? Challenges?

Don't use a lender from California because of their huge loan doc package. Also, make sure your loan office has done deals before and knows the process. Have them spell it all out for you. When doing a unique hard money loan (even though ours was not very unique for a hard money loan), have the officer tell you every step of the process up front. Our load person ended up forgetting about the insurance and almost holding up our closing date another week. Don't assume they know what they're doing!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I am a licensed RE agent so it made it easier to set up the house in the MLS and do the negotiating since we didn't have to involve another person. On the other hand, that meant I had to do all the RE Agent work. I only invest once every year or so depending on my free time, so remembering all the nuances is difficult sometimes.