Philadelphia, PA - Brewerytown Flip - Troy S. & David Ross

[Troy Sheets]

If you'd like to follow along and watch as my partner @David Ross and I flip a Brewerytown row home, the link to our blog is below. I'll also post pictures and updates in this thread but I won't replicate what David has already done so well to date. He's the keeper of spreadsheets so I won't go into numbers too much but it's safe to say, we're in over our heads already. I *think* we'll get through this and make some (very little) money but there are no guarantees. The beauty is, David and I are very similar in our approach to this first flip; first and foremost, we want to put out a product we're proud of. Secondly, we won't feel we've failed if, once the flip is sold, we can break even. If we can get a free education from the school of hard knocks, sign us up. Obviously we went into this flip expecting to make money, and we still could, it's just never been our focus since day one. That said...DAMN it'd be fun to turn a profit!!! 

Here are a few baseline numbers:

Purchase - $60k

Rehab budget - Initially $20k and 3-4 weeks, now scope has ballooned and we're at $40k and 2 months

ARV - Initially $115k, now $135k. We weren't going to move walls or finish the basement but, to compete and to offer a comparable product to others that have sold, we felt we must (so did our wives). There are a few sold comps that support this but, not on this exact block and Philadelphia is not just a city of neighborhoods, it's a city that can change drastically block-by-block and property values are no different. One block the wrong direction can be an easy $20k difference.

So, follow along, ask questions, tell us what we're doing wrong (and right, if that were to happen) and enjoy the show. 

http://www.argopg.com/blog/

[Troy Sheets]

Lots of surprises towards the end and more lessons learned! First, we likely sold too cheap. The final sale price of the house was $147k (with a $5k seller assist, so really $142k)...it appraised for $165k! We took the first offer that came along, only 7 days from listing till we had a signed agreement, and with the amount of interest and multiple showings a day, we should have held out a bit longer to see how much more interest the property generated. I'd venture another week could have gotten us at or above asking price of $149k, especially as the market heated up. The flip side is, the offer met our numbers and we were ready to move on to the next project to churn our money so, looking back, I'm not sure we would've changed anything. 

Next, once we were under contract, we let the buyer have too much. We ended up including a new washer/dryer for $1200, a home warranty at $500, and we got bullied into a $3k plumbing repair late in the process. We also let them push back closing another month till end of June (they wanted end of July) even though we initially agreed to end of May. 

Total rehab was around $48k including washer/dryer and plumbing repair. The plumbing repair was a small crack in the sewer lateral (underground in the back of the house) that my plumber said would last another 20 years. He was dead set against replacing it as it was up high on the hub where nothing was likely to get caught and cause a blockage. He was even willing to warranty it for one year. The buyer insisted on replacement and, since we were so close to closing and had waited this long, we caved. 

Even with all of the above challenges, we still netted ~$11k in profit. A little patience and better negotiating would likely have netted us another $5k-$15k, but we're not complaining!