Our First Flip

[Bill Hinshaw]

• Purchase price - $255,000
• Expected rehab - $80,000
• Expected ARV - $425,000
• Actual rehab/carrying costs - $155,000
• Actual sell price - $525,000
• Profit - $76,400
• Time to complete – 7 months to get on market, 9 months to close
• DOM – 27 days

See link to “after” images here: Our First Flip

The House
This was a mid century 3/2 2300 sq ft home on a large ½ acre lot near White Rock Lake in Dallas. It had a garage conversion that was essentially an extra room with a closet but no bath, poorly done with limited functionality. The home was being used as a rental at the time of purchase. As such, it was not maintained that well. It was still a functional home but needed a lot.

It had substantial layout issues. What looked like your typical master bath was right next to the front door and adjacent to the main living area, totally unconnected from any bedroom. Jacuzzi tub, travertine walk in shower, the works. The previous owners had poured a ton of money into this bathroom, but it worked against the sellability of the house because of its location. Also, the carport location took up almost all of the back yard of the property, so the huge ½ acre lot consisted of a large front yard and very little useable space in the back.

One other cool thing… Ron Howard produced his first made for TV movie, Skyward, on location at this house in 1980. Bette Davis was the lead actress.

The Market
White Rock Lake is surrounded by mature neighborhoods that have appreciated with age. It is close to everything Dallas has to offer and is a very desirable area for young professionals and families. The demand for the area combined with the age and condition of the homes creates a wide range of pricing that is perfect for flippers, and there is a lot of competition. There has also been an influx of large corporations into the Dallas area, increasing demand.

We started this house in March 2015 thinking our best ARV would be in the $425k range. In July, a renovated house across the street sold for a sq ft equivalent of $589k in 2 days. We listed ours at $589k in October, reduced it to $559k after 12 days, then accepted an offer at $525k after 27 days on the market. We experienced rapid appreciation followed by a cool off after the summer months ended.

The Rehab

• All new plumbing, including new master bath through slab in garage conversion
• All new electrical
• Most interior walls are new
• New drywall and trim throughout
• New windows
• New roof and gutters
• Repaired foundation and drainage issues
• Removed/replaced bowed stone wall
• Full cosmetic rehab with a higher end finish (real hardwoods, quartz, marble, etc)
• New cedar fence, landscaping and stone borders
• New driveway and demo of existing driveway
• Added exterior door next to new carport location

Strengths/Weaknesses
After 9 months and $155k rehab, we learned some things about ourselves and this business. Starting with our strengths or competitive advantages: Our GC is also a partner in the business. He has been around construction since birth and is fully vested in our success. My wife is a gifted decorator and has her own staging company; she handled our finish and staged the property. Also, we were able to use all cash on this property. That allowed us time to make mistakes without interest accruing.

We have to get better at project management and budgeting. We had zero knowledge of local contractors going in, so we are still learning how to deal with contractors and what pricing we should expect. We’re also in the process of assembling a small crew. I’m not sure exactly how many flips it will take before we feel like we have it down to a science, but I know we will get better pricing , efficiency and results with each one.

Flip #2 is already in progress and should be on the market in March.