Creative finance Fix & Flip - Avila Beach CA

[Scott Taylor]

Investment Info:

Mobile home fix & flip investment.

Purchase price: $500,000
Cash invested: $70,000
Sale price: $725,000

Creative financing purchase, fix/flip with retail sale.
Sub to
Owner Carry
Private money

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

It was a creative financing cornacopia and it helped the seller move out of town within 4 days of signing the agreement.

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

Past customer

How did you finance this deal?

250k owner financed
130k sub to
120k cash (private money)
We invested $0 of our own money into this deal.

How did you add value to the deal?

Hired general contractor to renovate the home. $60k initial estimate, 71k final costs.

What was the outcome?

Initial purchase was in August and contractor committed to get the house renovated in time for us to get it into the mls by Labor Day. He missed the target by nearly a month and we ended up paying holding costs, HOA, Utilities etc for an extra 6 months until finally selling in the spring for a reduced price.
Solid profit on the deal in the end.

Lessons learned? Challenges?

Need to screen contractors better. For jobs like this in the future I plan to run as owner/builder and hire/schedule subs myself. Not necessary to hire GC.

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

I'm a 15 yr broker in the area so i worked with agents, lenders, neighbors like crazy.
Devina Rici held a ton of open houses for us
and of course, i'm an awesome broker, so call me. ;)

[Drago Stanimirovic]

Hi Scott,

It seems like you’ve got a strong understanding of creative financing and investing strategies, but I do have a couple of comments and suggestions that could help you improve future deals.

First, while your financing structure was incredibly effective, it’s crucial to always account for potential delays in renovation and build in a buffer for holding costs. Contractors often run over time, and having a contingency plan in place both financially and logistically, could help you avoid a major dip in profits.

Second, screening contractors more rigorously or, as you mentioned, running as owner/builder to control subs directly can help you keep costs and timelines in check. This hands-on approach could also give you more flexibility to adjust to market conditions, like listing at the right time.

Lastly, even though you didn’t invest your own money in the deal, building relationships with your private money lenders and owner financiers for future deals is key. They can become a vital part of your investment pipeline, especially when you’re not tying up your own capital. It might also be worth looking into establishing a line of credit for future flips, so you have quick access to funds without needing to rely on third-party lenders all the time.

If you're interested in exploring more financing options or ways to streamline future projects, feel free to reach out.

Best,

Drago