First Flip - Goes under the W column

[Curt Herge]

I've obsessively been listening and reading from afar and want to thank this site for all the help and friendly attitudes I see. 

Personal background - Years ago I was living in DFW, my wife and I had just bought a house and got settled in.... less than a month later I was told I needed to come down to Houston for work. I didn't want to sell and take a loss on it so without any know how or real research I went ahead and put it up for rent. Posted the listing at midnight and had 13 requests for viewings before lunch the next day. It was from the first time we got a rent check that I had the bug. 

Fast forward - Spent most of the next two years devoted to the office and talking my buddies ear off about how I wanted more of these rent checks. Not long ago my buddy became my business partner and we got our first flip underway.

Property - North Texas Area

Asking Price - 121,000

Estimated Rehab - 45,000

Estimated ARV - 215,000

Estimated Timeline - 6-8 weeks construction + 4-5 sale 

On our first renovation project we were both somewhat cautious but the numbers worked so we went for it. Still stuck with our 9-5 jobs we hired a reputable GC in the area to be our guiding hands. We walked the job prior to closing to get a bid and a handful more times after to ensure everyone is on the same page - exterior power wash, paint, landscaping, removing a massive redneck deck, all new windows, new countertops, sinks, appliances, all new bathrooms, there wasn't a room we weren't going to touch.

So we ended up acquiring it for just over 117 with a reno bid of 45 and we excitedly ripped a 9500 down payment check to get this show going.

The project got started and we were seeing progress. Then after a few weeks things started to slow down. Communication stopped. We continued to go back to our project manager saying it wasn't acceptable. Needed updates. Needed progress. Couldn't grasp the hang up and was told we just didn't understand the situation. 

That wasn't an acceptable response to us. Weeks went by with nothing. Eventually went to the president of the company and said we needed something to change, we were assured that he would take point and handle us moving forward. 

Of all the potential pitfalls I had envisioned, the general contractor going out of business wasn't on my list, but it happened. Hindsight is 20/20 and we now understand why work stopped. The subs weren't getting paid. 

Thankfully we were out there enough with breakfast and coffee that we knew who the subs were and how to get a hold of them. We put aside the chasing the money owed to us from the GC to focus on priority number 1 finish the project out asap. Told the subs that we are apologetic but cant make them whole for what the GC owed them - at this point the GC had about 8k in monies unearned. Our message to the subs was we will ensure payment in full and on time for all the remainder of the work to be completed - approx 33k from original Reno bid paperwork. 

My wonderful wife, @allisonherge, was able to play GC Barbie and take over as quarterback. We got a new bid from the subs and that came in at a significant cost savings. From that point forward we finished the rest of the renovation in a little over 2 weeks.

We listed it at 225 had a lot of traffic in the first 2 days resulting in 4 offers From 215-230. We opted for the second highest offer but the strongest buyer. Final numbers 

Sale Price  - 220,000

Appraisal - 221,000

Acquisition - 117,000 (w hard money - Investmark Mortgage was awesome, thanks Paul!) 

Reno (all in) - 46,600 (8k of we are chasing with the contractors debt relief company)

Carrying cost -  ~9,000

Closing costs - ~20,000

Profit - 27,000

Timeline 11 weeks + 3 to close

So thank you again for all that this community is and does - I'm hungry, so let me know if you can help me find the next project!

Here are a few snapshots from before and after.