Successful First Flip In New Market, Before & Afters!

[Josh Parra]

After living in Boston for 12 years and learning from some of the BEST in the game, my wife and I decided to relocate back to her home town of State College, Pennsylvania. In Boston I worked with investors that converted multi-family homes into condos for the growing market of professionals. I attended many FREE local real estate investment networking groups and learned a ton of info. I hold a brokers license in Massachusetts so I'm comfortable with the Boston market but never got a chance to take the first step there. Moving to a market that I wasn't familiar with was a little nerve-racking because we were selling our Boston based business and starting from scratch but I knew that we had to make it work. I studied the market in State College and it seemed to be all over the place. Homes that hadn't been touched since the 70's were selling at market value in desirable neighborhoods. Our plan was to find homes that haven't been updated at a price reasonable enough for us to finish and sell as a high end home. None of the homes in the area had the amenities that we were used to in Boston so we decided to bring some metropolitan flare to this small town, and it worked!

We moved here last June and acquired our first project in September. We were introduced to the owner by my mother in-law. The owner had recently inherited/purchased the home with her brother from their family after their step-mother passed away. She relocated here from Washington to care for the home while her brother stayed in Maryland. She was eager to move back and the house had many issues that she couldn't keep up with. We met on several occasions, built a rapport, and I offered her a no hassle, reasonable, cash offer. Before agreeing her brother tried to buy her out by having a friend partner up with him and move into the house. After seeing the home his friend decided not to move forward so they ended up selling to us. 

Being a house that had been in the family, I promised that we would leave some original detail and that we would give the home the love that it deserves. I wanted to make her late step mother and their family proud of the renovation. Their step mother was very well known in the neighborhood, loved to entertain and everybody loved her so we knew that we had to do this right, especially since my wife grew up on the same street!

The property needed a full renovation which I budgeted around $150K with an ARV of $499K. The purchase price was $210K and about $220K since we paid for the seller's closing costs. This house needed EVERYTHING! New roof & siding on the house and garage, new garage door, new garage door opener, all new HVAC, complete house re-wire, all new plumbing, new hw heater, brought gas to the property, all new deck, new hardwood flooring on the first floor, all new interior/exterior doors/slider, overgrown back yard excavation, curb cut expansion, maple tree removal from in front of garage, new driveway, termite treatment, basement waterproofing system, basement wall reinforcement, and new footings since we open up the floor plan and vaulted a ceiling. There are probably a few things that I missed but it was quite the project. Some of these issues came about after we started construction so the budget obviously changed. We just wanted to make sure we addressed everything in order to present a turn key home for the new owners. Not only that, but this was going to be the first project for our portfolio in this new market.

Luckily for us we house hacked our home in Boston and sold it for a profit and we also sold one of our businesses so we were able to fund this deal with our own cash, which is what we initially planned. Our goal was to build our credibility in this new market in order to approach anyone to fund future projects. It just so happens that after seeing our final product, we were actually approached by a few people that want to fund our future deals! 

After it's all said and done, we spent about $200K on the renovation. The house is currently listed for $499K and we have it under contract for the second time. Our first buyer was a cash buyer but unfortunately the sale of their buyers' home fell through. We're keeping our fingers crossed for a smooth closing so that we can move on to the next project!

Here are the photos: