2nd Flip = $26k Profit! Lessons learned = Invaluable!

[Kurt G.]

Purchase Price:  $39,000

Buying Costs:  $1,000

Selling Costs:  $10,400 (Incl. commission, buyer's closing & warranty)

Rehab & Holding Costs:  $24,400

Sale Price:  $101,500

Profit:  $26,700

Holding Time:  112 days close to close

This property amazingly fell into our laps by word of mouth the day after we closed the sale on our first (modestly profitable) flip.  We closed a week later for $39k, which included a '98 Camaro convertible and '85 Honda CB 750 Custom and the contents of the house, and I ended up trading all of the extra stuff in exchange for work on the house.  This was not a good deal given the quality of the 'contractor' that I hired, but it was a valuable learning lesson.

My retired father-in-law wanted to a lot of the work on this one, and while it was great working with him no the project, I ended up spending much more time working on the property than I wanted really wanted to because I felt like I needed to be there if he was.  After closing yesterday, we took him and my mother in law out for a very nice celebration dinner and to announce that we were sending them on a cruise, but they aren't accepting...  I truly wish they would, but it isn't going to happen - All I can say is that my wife and I are blessed with a great family!  Although we all worked very well together and kept costs down, we have all agreed that future rehabs will be done with contractors.  It was an excellent learning experience.

The house was in pretty rough shape all around, but the smell from decades of smoke and dog urine were horrible.  Overall, we are very happy with the results, and the buyers were very excited about their new house at closing.  Neighbors have been not only complimentary, but thankful for turning an eyesore into one of the better houses on the street.  The original owner was out of state and losing sleep over it, and I found out later that he has been very happy since we closed and got the problem out of his life.

I could go into great detail on newbie mistakes, but I will just list out key learnings from this adventure:

• I will be doing VERY little work on the next property!
• No more el-cheapo contractors.  All will be properly insured and vetted.
• Proper SOW's and contracts will be used from now on.
• I learned about FHA's seasoning requirements (thankfully didn't lose the deal over this).
• Hoping a buyer will overlook a worn out roof can cost more than replacing up front.
• Do NOT trust agents on the other side of the negotiating table, and read repair contracts VERY carefully!  We ended up doing $500 in repairs that three plumbers deemed unnecessary and stupid because the buyer's agent reworded an item from the inspector's report, and we failed to catch it.  We will not make this mistake again.
• Treat your business as a business!

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