Flip or Flop - East TN style

[Millie Pendola]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $50,000
Cash invested: $10,000

Flip or Flop - East TN style!

Deep Dive:
50k HELOC funded the deal
off market - expired listing
all in at 70k
ARV 150k

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

it was small enough that I could make mistakes and them not be "expensive mistakes"

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

off market, motivated seller.

How did you finance this deal?

HELOC

How did you add value to the deal?

all cosmetic - needed LOTS of love

What was the outcome?

SOLD it

Lessons learned? Challenges?

WOW literally made all the mistakes and learned a ton.

1. Time is $
2. Being a project manager is HARD and I dislike it more than I thought I would
3. Will not be flipping lower end houses ever again
4. You make your money when you buy, buy smart
5. This would have been a good BRRRR

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

Me!

[Rob Beeman]

@Millie Pendola  Thanks for sharing the deal. I agree with many things that you expressed:

Being the project manager (GC) is a challenge, however if you have someone other than you in that spot, you MUST keep a watchful eye or you can get burned (ask me how I know).

Flipping low end props has draw backs (neighborhood, cost/value restrictions on the level of rehab and still keep it profitable, rehab lenders aren't interested in small loans, and maybe even the unappreciative or qualified buyers). One interesting fact that I discovered when I migrated out of low end props was that operating in better neighborhoods attracted better contractors (they didn't want to work in neighborhoods with higher crime rates - go figure).

Making money when you buy - PURCHASE PRICE IS EVERYTHING! It is also the figure in the deal that you have the MOST control over. Overpaying can lead to under rehabbing which can lead to a lower price to move the property and ultimately less profit. If a real estate investor seeks to improve on anything, it should be on negotiating and buying RIGHT (whether flipping, holding or wholesaling).

Time is $ - ABSOLUTELY. Smart investors reduce the rehab time by negotiating 24/7 access to the property BEFORE closing on the purchase (a contingency in the purchase agreement). This allows you to get contractor bids, take measurements, game plan, have orders ready to be placed for larger supplies (windows, cabinets, HVAC, etc.)(however the orders are not actually placed until the day you own it), schedule start times with the demo crew & contractors. This step when done properly can reduce 2-3 weeks off a rehab.

I might be able to help you with rehab funding as you target higher valued neighborhoods for your next project and I will  send you a message. As for this completed project, it reminds me of a saying that I used when flipping - "They look best in the rear view mirror".