One down, lots to go

[Jaylan Archer]

Just wanted to post a brief success story that hopefully will help someone else out. 

I purchased a foreclosed home with my brother last year for $52k that needed just about everything. We went in as partners and that in itself taught me a lot. 

We had two options on this house, spend a little, paint it and make sure everything was working or go all out. We made budgets for both and decided that the upside was much better if we went all out. 

We closed May of 2014 and didn't get the property sold until August of 2015. I know that this is incredibly long but I also finished up my senior year of college in another state during this time. 

Couple lessons: Choose your partner wisely and be on the same page throughout. You MUST talk about how each of you will be compensated beforehand, and perhaps discuss financial consequences if a partner couldn't hold up their end of the bargain. Whether it be time, finances or even connections, fair compensation and an exit strategy need to be discussed BEFORE becoming a partner.

Plan on going over budget. I don't know if this is something every flipper runs into or its just cause I am new. You will go over your budget, work it into the numbers.

Hire a competent real estate investor. I say this one with a touch of humor because I was actually the real estate agent for the property as well. However, your agent should use a professional photographer and be proficient in marketing.

Lastly, go above and beyond in finishes. This is more so my opinion but I still think it was a good lesson learned. Make your flips something special in each one and shoot for making your home the nicest on the street. This doesn't always necessarily mean spending a ton of money. Neutral paint colors or even ten bucks on a fancier door knob can make a difference between what a buyer think as 'cheap' and 'high end'.

Finally the numbers.

Purchase price: 52k

Renovation: 78k

All in: 130k

Sale price: 210K

After closing costs my partner and I split 60k which I was pleased with. I know this isn't a great return with the amount of time that we owned the property. However, the lessons I learned and the experience I had was priceless.