First Live-In Flip Complete! How did it turn out?

[Eric Martin]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $111,611
Cash invested: $30,000

I'm excited to share the before and after photos of my latest real estate flip! The final product turned out great and I am now proudly living in my own little slice of paradise. How do you think it turned out?

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

I liked this type of deal because of the tax advantages of doing a "live-in" flip.

I'll be able to benefit from IRC 121 when it comes time to sell. This allows homeowners to exclude up to $250,000 ($500,000 for married couples filing jointly) of capital gains on the sale of their primary residence.

I credit learning about this strategy from Craig Curelop's book "The House Hacking Strategy" & Scott Trench's book "Set for Life".

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

I purchased the property off-market from my employer, Rapid Fire Investments (a regional wholesaling company). As an employee, I get first access to our deals and even benefited from an employee discount program, which allowed me to get an even better deal. I bought this one right at 50 cents on the dollar!

How did you finance this deal?

I financed this with River Bank & Trust, a local bank. The bank plans to hold the loan in their portfolio, rather than selling it to a secondary market, which gave me some favorable terms. In this case, I borrowed 90% of the purchase price AND repairs which meant I actually walked away from closing with a check from the bank. I still paid out of pocket about $30,000 for half of the renovation cost.

How did you add value to the deal?

I added value by renovating the property.
✅ Added a shower to convert from half bath to a full one.
✅ Replaced cast iron plumbing to PEX
✅ Paint & LVP flooring
✅ Brand new kitchen with granite countertops, shaker cabinets, backsplash, and stainless appliances
✅ Brought the laundry from an exterior mechanical closet to inside the home
✅ Full exterior refresh for curb appeal
✅ Added a Tesla Wall Connector in the carport for at-home charging ⚡️ (ok, this one is just for me but is pretty cool)

What was the outcome?

I now have a wonderful home to live in with plenty of created equity via forced appreciation, and minimal paid-in equity. This means I have more cash to put to work elsewhere, not tied up in my home!

Deal Analysis:
Purchase Price: $111,611
Estimated Renovations: $50,000
Loan Amount: ~$145,500

Actual renovations: $60,000
Cash out of pocket: ~$30,000

Estimated (Tax-free) Profit after sale: $35,189*
($220,000*.94-$111,611-$60,000)

CoC Return: 117%*

*ignoring pmt & utilities

Lessons learned? Challenges?

I made a bad call on my first contractor. I was too quick to give him the job because his quote was the cheapest. He ended up prioritizing other projects and left mine sitting for about 2 months. I ended up having to fire him and bring on a new general contractor to finish the project.

In hindsight, I wish I went with the second contractor from the start. He did quality work in a fair amount of time. You get what you pay for!

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

I had a great team on this deal. From the wholesale company that brought me the deal, a great lender, and great contractor (2nd time is the charm).

Without Rapid Fire Investments, I wouldn't have even found the deal so I am especially grateful to them.