First Investment Property Under Contract in Maryland

[James Bowerman]

After several months of preparation and searching I've finally got my first property under contract. My goal is to rehab and flip the property within 3 months. Any feedback would be greatly appreciated. Here are the particulars:

Property is a 3/2 rancher, just under 1400sq/ft, located in Pasadena, MD. The house is in Anne Arundel County, in a water accessible community, and in a good school district. It is a HUD property and was listed at $171k on HUDHomestore.com. I offered $150k with the help of my real estate agent, which was accepted. A $1k earnest money has been deposited in escrow.

Estimated ARV is $250-275k and repairs $35-45k depending on rehab and product. I'm working with a hard money lender who will loan 100% of acquisition at 15% and 4 points, interest only. The rehab will be paid for through seed capital I've acquired through credit card stacking.

I'm set to have the property inspected on Thursday (10/8) at which point I'll put together a final SOW. I've already had one contractor look at the property and I'll be scheduling at least two more after the inspection is complete.

Scheduled closing date is 10/28, but I have until the 16th to back out if the inspection is not satisfactory. Thoughts and concerns?

[James Bowerman]

So the first flip was a success! Settlement went through without issue on March 30th and it's officially off my hands. Here is the timeline and all the final numbers:

Listed for sale in Pasadena Maryland on HUDHomestore.com for $156,800. This was a 3/1 rancher with 1,128sq/ft of living space.

Offer placed for $132,000 on 10/30/2015 which was accepted the next day.

Paid earnest money deposit of $1,320 and put under contract.

Settlement took place on 12/8/2015. I used a hard money loan for 100% of the purchase price at 14% and 4 points. Total buying costs were $14,507.

Improvement costs came to $54,781 which was primarily done by the general contractor I hired. I borrowed $20,000 from a private lender to help pay for the rehab and closing costs. The rest I paid for using credit cards with 0% interest rates (promotional rates for one year).

The property was listed for sale on 2/4/2016 for $250,000.

I accepted an offer on 2/11/2016 for the full asking price of $250,000 plus 3% help towards closing.

**Typically there is a 90 day seasoning and I wouldn't have been able to put it under contract before that 90 days if the buyer was financing using an FHA loan. However, this buyer was pre-approved for and using conventional financing, so the 90 day seasoning rule didn't apply.

Settlement took place on 3/30/2016 and closing costs plus commissions came to $23,716.

Holding costs came to $6,538 which includes the mortgage payments, taxes and utilities.

Total cash invested in the property came to $49,288.

Total profit came to $18,458 which is a 37% ROI. 

***ROI is actually much higher since most of the money I contributed was actually the banks money and will be paid back to the credit cards.

Right now I'm taking what I learned over the past year and finalizing a business plan. I'd like to flip a couple more this year, but I need to find other means to finance it since the credit cards will need to be paid off in June. If anyone is interested in partnering up on some deals I welcome the opportunity.