Single Family Home short term rental ended up flipping

[Bart Lucas]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $80,000
Cash invested: $55,000
Sale price: $179,000

Old Single Family Home went from a short term rental to flipping it.

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

The owner approached me to help him find a renter but he really just wanted out of the landlord business. The home was valued in Oct 2021 around $120,000 as it was in livable condition. The owner offered it to me for $80,000. I couldn't say yes fast enough. No negotiation needed.

How did you finance this deal?

Conventional loan with 20% down, which we had in savings. I took a HELOC against my personal house to fund the rehab.

How did you add value to the deal?

We were going to turn this into a STR so we gutted. The house was built in 1953 and had the original flooring (asbestos) and kitchen cabinets, int trim & doors were original knotty pine. The inside exterior walls were struck concrete block.
We replaced windows, int & ext doors, added drywall to ext walls, added beaded paneling to ceiling, new kit cabs & tops, new appliances, everything new in bathroom, and moved some doors to utilize space better. And add a new laundry room.

What was the outcome?

When we were ready to start renting as a short term rental, the original owner's daughter approached me about renting or selling to her. This house is located next door to her parents. So we agreed upon a price and we ended up flipping it.

Lessons learned? Challenges?

We got really emotional involved with this property when adding items to it. Spent more than we should have for a regular fix and flip. Had we kept as a short term rental, it would have made sense. Our contractor was expensive. He was very good but expensive. I probably would not use him on a regular flip.