Rental Property Investor · Providence, RI · Member since 2014 · 15 posts · 21 votes
Hi, I just wanted to share my first flip with the BP Community. On February 1st I purchased a single family for $105,000 from a wholesaler. The property was the ugliest house in the neighborhood and was abandoned mid-rehab when the insurance proceeds did not cover the cost of to repair the home after a small a fire.
Because I purchased the property in Cash and bought it As-Is the local building officials were not in the loop and immediately put me on their Sh*T list when I filed for permits. Original owners attempted to put the house back together but must have ran out of money which is why they walked away. It took me OVER 30 days to get all the proper permits but we finally started March 1st. After 60 days of construction, I put it on the market and it sold within 1 hour! I knew there was inventory so I even priced it at a premium but it still sold in less than one day. Now all I have to do is cross my fingers that it will appraise!
When I say I sold something, I mean I actually got a check in my hand. What you mean is that you accepted an offer in less than 1 hour. An offer and a check... good thing they aren't the same thing because I give out lots of offers every week.
Hey, I'll give you a $1M for that house. It's sold!! Now you can post how you made $800K profit on one deal.... as long as it appraises. That little contingency right there, that cost me a retail sale earlier this year. Those appraisers love to kill sales.
Here's some sound advice that will prevent you (and anyone else reading this) from buying a new car/furniture/vacation with your pretend profits before close of escrow; The deal ain't done until the check clears the bank. Remember that. It is very important in this business. Very Important. It will save you from getting into another deal with your expected profits and then facing financial ruin when they don't show up on time. And, it will prevent you from having to come back here and tell everyone how it didn't quite work out like you thought it would (they typically don't). Nothing worse than a big serving of crow.
You won't believe it and no one on here probably will either, but I actually had a bank wire money on a deal, then somehow magically suck it back out and *Poof!* they never funded. Just like that. Even the escrow company couldn't even figure out how they got their money back, but I can certainly tell you they did it. That was where that phrase above came from. Once they wired we thought it was a done deal. Nope. Here are two more rules of thumb for real estate flippers;
It will take long than you think it will.
You'll make less than you expect.
I'm about the most optimistic person you'll ever meet, but rules are rules and these three have proven themselves true time and time again. There's always exceptions, but don't be fooled.
House looks great and I hope it makes it across the finish line. On a side note; what is all that white stuff and was it expensive getting it all cleaned up?
Awesome Tyler Leonard Very inspiring also. I bet you would work with that wholesaler again. Sounds like the most important part was the fact that you found a great deal
Yeah, I don't ever want to accuse anyone here, especially being new. However, those profits make zero sense and to best honest I think are extremely fudged. It's listed for $239,000 online, but he said 249,000 and someone offered 259,000 and hour after? he calculated 0 dollars for closing costs, and said a family member is his realtor so he's paying nothing on that.. however, how about the buyers commission, how about the broker fee? He will probably make a good profit, but nowhere near 114,000 like he insisted AND unless he's 1031 exchanging, he's going to be paying short term cap gains tax.
I feel it's misleading to newbies who don't understand the math part too well..
@Matthew A. another thing is, he paid $2k in interest. how does a 23 year old have $150k sitting around and how does he get a loan like that? maybe he has family members that have $. that does happen.
another thing I have found is most people say they make $100k and then find out later they have partners.
so the $100k is misleading.
that's why I hate partners on my deals. I want all the reward. :)
another thing, most homes I see, they always ask for (& get) a closing cost credit - especially if get a full price offer and 1st time homebuyer (which this one clearly appears to be).
I got a buddy who just flipped a house for $390k. guess what? even that buyer got a $5500 closing cost credit.
the guy is a newb so maybe he's forgetting something. he's got a good spread though if the rehab was $40k.
Joshhal, I think @Aaron Mazzrillo was referring to the snow. Us SoCal dudes aren't too familiar with that stuff or any other wet substance that supposedly falls from the sky. My guess is a good hair dryer or blow torch ought to do the trick in removing it?
Jokes aside though, speaking of killz, I read that an ozone generator is pretty effective in getting rid of the smoke smell in a house... what do you think?
The questions raised through the thread do seem valid. Zillow says listed at $239,900 but doesn't say it sold. Assessor a database doesn't even mention the January sale for $95,000. I am also amazed you got he work done for $40k. Not completely unreasonable, being small, but being that everything is new, and I am familiar with prices in this area, I would expect 50-60k for that upgrading. Do you have a breakout of your exact costs to share?
I bet something happened on this flip; maybe a home inspector found something major. I hope not but it just goes to show you, this business is far from easier than people make it out to be.