From Fix and Flip to Build and Flip

[Kevin DeBoer]

Investment Info:

Single-family residence other investment.

Purchase price: $232,500
Cash invested: $237,500
Sale price: $700,000

This property has not actually sold, but is the prototype for future investment properties. It was appraised at $700k after completion of the first permit. I've since pulled a second permit and will soon be appraising right around $2m with an additional $330k invested for total equity of approximately $1.2m.

How did you finance this deal?

I utilized a personal investment of $250k and a land loan. Once the first permit was closed out I was able to refi and pay off the land loan. It also allowed me to pull enough value out of the home to finance the rest of the build.

How did you add value to the deal?

I built a 6400sf house on a piece of vacant property for $75/sf in a market where new homes average $380/sf.

What was the outcome?

I got the first phase appraised at $700k. Upon completion of the home I expect the total value of the home to appraise over $2m.

Lessons learned? Challenges?

I've learned way more than I even know. The biggest takeaway is that this is the way I want to be involved in real estate - building custom homes as the owner, AE, GC and labor. Having the ability to design and engineer solutions on the spot while knowing every intricate detail of a home allows me to ensure a quality of construction that can't be as easily met any other way.

I also learned where I would benefit from engaging more experienced labor and look forward to doing so on the next one.