Flipped my first property! Learned about mindset and made $25k!

[Brian Bandas]

Hey BP community!

Wanted to share this success with you...

I flipped my first house--just closed on the sale this last Friday. I made $25k, which is pretty solid. What's even more exciting, though, is the implications: my numbers were right. I managed it well, evaluate the deal accurately, and learned how truly ACHIEVABLE this is!

I'm excited not because of the one fish I just caught, but because I just learned HOW TO FISH! I can now catch fish for the rest of my life!

I have held a handful of rentals for several years, and as I have begun to formulate a plan to build my investing company, I know that the ability to capitalize on every opportunity is crucial. So at the beginning of this year, I decided I had two tasks: raise private money, which I hadn't done yet, and flip a house. That would open doors.

In this case, I had never raised private money or even used a hard money loan. I knew that I had the capability, though, if I really had to. So, I deliberately backed myself into a corner.

I went under contract on a home that I could buy from a wholesaler at $55k, without having yet solved the financing problem. I had some life lines if everything truly went sideways, but none of them were ideal, and so I put myself in a position where I had a 10-day closing period to lock down some funds.

It was perfect! It forced me to get on the phones in a purposeful and aggressive manner--I did just that, and had THREE financing options by the time the deal closed!

Next, I'm proud to say that I built in enough cushion in my rehab numbers, etc, that when a few unforeseen issues came up, they were nothing more than nuisances.

I work as an agent by day, and knowing my market and numbers was crucial. The second I saw this wholesale offering, even without comp-ing it, I knew without a doubt that unless it was sitting on a sinkhole, it made sense. I also comped my ARV exactly right. I don't say this to brag, but to encourage you newer investors out there to get SERIOUS about your ability to comp a home. (Maybe that'll be a different forum post...)

The funny thing is, everything went to plan until the VERY END. Of course!

Repairs done, under contract, just days away from closing...... TITLE ISSUES!

The home I flipped was a manufactured home on a foundation. The home had changed hands twice, with bank involved--at least that was my understanding. Manufactured homes must undergo a process called de-titling, where they are turned into Real Property instead of, essentially vehicles, with a VIN number.

By the time closing day had come around on the acquisitions side, the title company hadn't completed de-titling, but said they were finishing it up and that it should be done in a few days.

Fast forward almost TWO WEEKS: "What's the status on the title stuff?"

"We have a problem." UH-OH. Not what I was wanting--or expecting--to hear.

Turns out, they didn't have a VIN number, or a HUD number (assigned to all mobile homes by HUD after 1979, I believe?) and couldn't identify the home, and therefore couldn't de-title it! Information that would have been awesome to have before I bought it, haha!

Long story short, I met a guy at a BP meetup last month in Nashville who shared my exact story, which happened to him with uncanny similarities. He was even able to show me a photo of where they had found the HUD plate.

So after scouring the home for hours, crawling through a crawlspace for hours with a flash light looking for a VIN number, I finally went out to the home, pulled some siding and insulation off of the side and found the HUD plate almost immediately, thanks to my fellow BPer's identical experience!

Don't you just love the investing community??

My takeaway's:

1) I can and SHOULD be doing this

2) There is always more to learn

3) I should tighten up some of my systems to protect myself just a bit more

4) Every deal will teach me something and make me a better investor

So that's the very abbreviated version of my first flip! Bought for $55k, reno and carry costs of about $30k, sold for $110k.

Walked with $25k and the confidence to do another... which I'm closing on the day after tomorrow!