COMPLETE GUT fix and flip for first deal!

[Chris Hotz]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $5,000
Cash invested: $65,000
Sale price: $75,000

First real estate deal ever outside of purchasing my primary residence. Purchased at sheriff auction for 5,000. 50/50 partnership to finance the rehab and do the work. This was a 2 story SFR, around 1200 sq/ft. Built in the early 1900s. Complete gut! Outside: all new windows, doors, siding, roof, deck, porch and some foundation work. Inside: all new electrical, plumbing, HVAC and ductwork, insulation, moved/removed some walls, new stairs, all new stringers in kitchen. Slightly over improved the property with mid-higher finishes for the area. Didn't take into account holding cost and didn't shop around for insurance(close to 3k for insurance alone). A lot of issues with contractors and mismanaging expectations cost us significantly over the course of the project. (Had to remove and reinstall all the windows due to the first guy doing it completely wrong). Our fault for not checking in! At the end we got it done and sold it through a trusted realtor. Priced it to move and was under contract in less than 2 weeks. Pretty much broke even on this deal but wouldn't take it back. We would have never gained the knowledge we did unless we took the action and worked through all the issues we had. Great learning experience.

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

Found it online and bought it at Sheriff Auction

How did you finance this deal?

Cash for the original purchase. Then borrowed from 401K to fund the rehab.

How did you add value to the deal?

Complete remodel

What was the outcome?

Sold for around 75,000. Broke even if not lost a little bit.

Lessons learned? Challenges?

If a contractor is available to start your project the next day, that should be a red flag! Set expectations up front and check in regularly.