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Updated over 8 years ago, 05/21/2016
Philadelphia, PA - Brewerytown Flip - Troy S. & David Ross
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.
Thanks so much for hosting such a great event! Fabulous idea and it was really nice meeting everyone!
Great meetup/open house! It was great to meet everyone and see the finished product. The attention to detail really shows through and it looks phenomenal. Best of luck finding a buyer asap.
Thanks @Renee Gambacorta and @Lucas Pfaff! I appreciate everyone taking time out of their busy lives to stop by and see what we're up to. It was a lot of fun putting faces to names and meeting new ones.
We've actually been kicking around the idea of starting a BP/Brewerytown monthly meetup at a local coffee shop. It won't be Brewerytown specific, just good old fashioned REI fun! If there's interest I'll gladly set it up. Let me know times and days that would work to hold a monthly get together and I'll make it happen. I'm guessing early evening, 6pm, on a weeknight?
Originally posted by @Scott Weaner:
I was unable to make it down today. How did it go?
I'm biased :) but I think a good time was had by all!
I would certainly try to make this meetup if it comes together.
Thanks so must for hosting.
If you (@Troy Sheets or @David Ross) could let me know which laminate you used for that basement it would be appreciated. Looked something like this (Lowes - Hardwood).
Is the house listed on the mls
Hey @Troy Sheets & @David Ross
You've started a great thread and built a great website. Thanks for sharing your experience!
Originally posted by @Account Closed:
Is the house listed on the mls
Link Here it is...
Not quite time to celebrate yet but we accepted an offer on Friday and the house is under contract. We'll be celebrating when it closes and check is in hand!
Originally posted by @Troy Sheets:
Few more lessons. Make sure EVERYTHING you can think of is on your scope of work. We missed a few odds and ends and they've cost us dearly in personal time as we did the work ourselves just to wrap up.
- Returns of unused materials. I have a smallish SUV and @David Ross has a compact car. Tough fitting boxes of hardwood flooring in either. Plus, the Home Depot clerks get really pissed when you have 3 carts of stuff to return, some on your card, some not. David paid for some with his card, so you have to break it up between store credit and refund on the CC. Sorry to bother you at work :)
- What I call "rough" clean up. We have a cleaning lady in today but she's not shop-vaccing up construction debris and the like or standing on a ladder to clean the outsides of the casement windows, picking floor protector boards up, disposing of trash, peeling stickers off of appliances and setting up shelves and burners...
- Odds and ends like applying Deck Over to the deck, painting basement stairs, etc. Somehow these slipped through the scope. We did get a few things in for free like backsplash install but, overall, it's still a good many evenings and weekends worth of work we got stuck doing
- The electrician pulled a permit for the whole house! This means everything now has to be brought up to current code. Tamper-resistant receptacles throughout, arc fault breakers, etc. This mistake on his part will cost us ~$1,000 in labor and materials and we didn't find out till we failed electrical inspection late last week. Failing the inspection wasn't a big deal, changing out ~$700 worth of breakers and receptacles hurt though, especially since all the receptacles were already new...just not tamper-resistant
On the bright side...WE'RE DONE!!! Pro photos are being taken for the listing today and it should be on the MLS a day or two after that.
Excellent pointers, Troy. It was a pleasure to finally meet you and your lovely wife and say hello to David from me as well. The pictures are an understatement for what the house truly looks like. I wish you all the best on this flip hereafter.,,,
Kudos,
Mary
I am very happy that you got your house under contract so quickly. I hope you make a decent dollar.
Congrats Troy! The place looks great. Good luck on the closing. Did you originally find this deal on the MLS or other means? Just curious. Thanks.
Thanks all! @Steve Francis, yes this house was listed on the MLS. It had only one picture, of the front exterior, and there was plywood over the transom and basement windows. It looked like a shell. There was no listing description, it was left blank. If there were decent pictures and a description the house would've sold for much more. There are gems on the MLS, you just have to mine for them.
Hey Troy, I've been following along on your website and was interested to see if you have any before pictures? Was the house a shell when you got it?
Originally posted by @Kenneth Mark:
Hey Troy, I've been following along on your website and was interested to see if you have any before pictures? Was the house a shell when you got it?
Sorry I just saw this Kenneth! We didn't start with a shell, the house was remodeled 7 or so years ago as a pretty nice rental for the area. The systems were all upgraded, the basement was dug down and slab poured, etc. It turned out to be a double-edged sword though as we still ended up doing lots of rework to the systems and finishes that probably wouldn't have cost us a lot more if we'd just gone all new off the bat. Added to that is, the work that was done initially wasn't great, so we had to fix/modify/bring up to code lots of odds and ends.
Lesson learned is sometimes it's better to start from scratch. In this case, I think we came out ahead with the systems and previous work that was completed but it wasn't nearly the savings we were expecting once we got into it!
SOLD! We sold this one yesterday and we now own two more we're starting on ASAP. We have a third under contract but have assigned it for a tidy profit as it doesn't really fit our model.
@David Ross and I will update this thread tomorrow with numbers...I hate to admit it but we did a horrible job tracking our expenses so we don't know exactly what our profit is. We have a rough idea but still have to tally it all up to know for sure. We now have an accountant who is working with us to set up systems so this doesn't happen again. I'm not looking forward to going through the shoebox of receipts and trying to figure this mess out! Have a system in place and use it. We started out with the best of intentions and some really great excel sheets but didn't maintain it...
Would love to get some more info on your next projects! Are they also in Brew town?
Originally posted by @Chris Martin:
Would love to get some more info on your next projects! Are they also in Brew town?
One is in Brewerytown and the other is in Fishtown. Let me know when you have time to get coffee and I can show you the one in Brewerytown. The Fishtown property still has tenants in it...
Are you coming to the next meetup?
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!
Hey @Troy Sheets great rehab. I have a few questions about a property I'm looking at in that area and wanted to ask a few questions if you have some free time.
Originally posted by @Marc Oister:
Hey @Troy Sheets great rehab. I have a few questions about a property I'm looking at in that area and wanted to ask a few questions if you have some free time.
Thanks Marc! Replied to your PM, probably easier to chat there.
@Troy S and @David Ross what a great way of putting down your experiences rehabbing properties around Philly!
I am new to BP (from Voorhees area) and happen to stumble on this thread. Loved the blog and all the insights you guys and others on the thread have put in.
Congratulations on selling the properties in Brewerytown and the recent one in Fishtown (saw it on your blog)!!
If you guys do catch up for networking, I would love to meet you sometime.
Raj
Originally posted by @Neeraj S.:
@Troy S and @David Ross what a great way of putting down your experiences rehabbing properties around Philly!
I am new to BP (from Voorhees area) and happen to stumble on this thread. Loved the blog and all the insights you guys and others on the thread have put in.
Congratulations on selling the properties in Brewerytown and the recent one in Fishtown (saw it on your blog)!!
If you guys do catch up for networking, I would love to meet you sometime.
Raj
Hi Raj,
Thanks for following along and we're always interested in meeting other investors!
@Troy Sheets I echo the others. This has been a great post and very helpful to learn a lot. Continued success to you and @David Ross