Flipper/Rehabber · Portland, OR · Member since 2014 · 119 posts · 121 votes
Hey BP,
I've yet to post any of my projects on here and they happen to be my favorite type of posts to see from other members so I figured I'd share one. This is a flip in Tigard, Oregon (suburb of Portland) that just officially closed today. I bought it in August for $262,000.00, put about $60-65k into it (still need to tally up the final numbers) and sold for $410,000.00. At the time of purchasing this property, I was running a little low on capital so I funded 100% of purchase price plus most of the rehab costs so my holding costs are slightly higher than usual.
Unfortunately, this is one I don't have the before photos for but we did new windows, garage doors, fencing, refinished the hardwoods throughout, completely updated the kitchen and both full bathrooms, all new doors and millwork, all new fixtures, new carpet, new furnace & water heater, and the list goes on. The project took about 8 weeks from start to finish so it was a relatively quick one.
The deal was brought to me by a wholesaler in the area and he made out nice with a 5-figure assignment fee as well. :)
@Anna M. For photos you need to use a wide-angle lens and a tripod (You can see a tripod leg in the shadow on the bathroom photo). DSLR would be the best but you can even get good shots with a phone with a snap-on lens and a tripod. Results will vary by phone type though.
Also works well if you can remote fire the camera, that way you can get it into a corner and not have to stand behind it to shoot.
Open all drapes and turn on all lights (see the Kitchen Photos)
Also don't be afraid to experiment with cheap external battery powered lights that you can use to light up a dark area. A flashlight and a paper towel tube can do some wonderful things :)
Last tip would be to use an area or grid exposure setting and not a point (center point of lens) This way the camera will try and balance out the lighting on it's own across the whole area and not just the center of the lens.
Those should be some easy ways to improve your photos if you take them on your own.
@Omid A. Congratulations.. the house looks awesome! Can you please breakdown how you managed to do all that rehab with just $65k? I am sure that will be valuable information for all newbies here. Thank you for sharing your success story! Wish you the best for many more ahead.
I fund my projects using private money from lenders that I connected with through my networking/marketing. They are not institutional investors by any means, mainly retired folks with money they don't want to put in the stock market. If you are finding quality deals then it's an easy sell to get a private money lender on board if they have any knowledge of real estate. Where else are you going to get 8-12% annualized return with your money protected by a hard asset at a steep discount from its market value? It's a no-brainer.
"Where else are you going to get 8-12% annualized return with your money protected by a hard asset at a steep discount from its market value? It's a no-brainer."
Looks great. Congrats on the success!
Most sophisticated private investors would require 20%+ returns for development deals (can easily get returns in the teens on non-development deals with large experienced operators); so, 8-12% is not a no-brainer...but investors like yourself do a nice job of securing those types of terms.
I agree in that more sophisticated investors would expect higher returns, especially if they are investing in development deals. However, that's not your average trust deed investor by any means. Your average private lender is looking for an alternative to CDs and stocks. When you compare a 10% return on a trust deed loan with CDs or index funds, it becomes a pretty easy sell...especially when you factor in how low their level of risk is if the property is purchased right.
@Omid A. Great job! May I ask how you financed 100% of the purchase price? I would assume a loan from family/friend?
Thanks Anthony, it was a loan from a private lender. The reason they agreed was because the loan is based on the asset itself, even at 100% of the purchase price being loaned that's still only about 65% loan-to-value.
I agree in that more sophisticated investors would expect higher returns, especially if they are investing in development deals. However, that's not your average trust deed investor by any means. Your average private lender is looking for an alternative to CDs and stocks. When you compare a 10% return on a trust deed loan with CDs or index funds, it becomes a pretty easy sell...especially when you factor in how low their level of risk is if the property is purchased right.
There a big difference between investing in a 10% long-term trust deed vs investing in a short-term flip for a 10% annualized return....they are not comparable. The total absolute dollars of return are very different.
Active investing in flips vs passive investing in index funds is also not comparable. There is no such thing as passively investing in flips (done properly).
It's a great flip and a great cost of capital that you have achieved/earned.
@Omid A. fantastic work, and congratulations! As a complete newbie I have some questions for you:
1) All the books I've been reading so far swear by the 70% rule, but you didn't. How did you analyze the deal? Were you able to take the contractor into the property before purchasing to have an accurate rehab budget? I think this is the only way to make sure you would end up having a nice profit after all.
2) I understand you borrowed 100% of the purchase price. Did you borrow the renovation and holding costs as well?
3) Did you have to make monthly payments to the private lender, or you paid everything at the end of the deal only?
4) So your contract with the private lender is basically: you give the money, and your money is secured by the property itself. Is that correct? I'm asking because I'm currently looking for ways to finance my first flip as well.
5) Do you use LLCs, or did you do this on yourself? I'm asking because of the tax impacts. Also I'm assuming that the $45k profit is before taxes. Can you confirm please?
So sorry for so many questions, just trying to learn as much as I can. If you're not comfortable sharing all this information in public, just PM me please. Thanks!
@Omid A. fantastic work, and congratulations! As a complete newbie I have some questions for you:
1) All the books I've been reading so far swear by the 70% rule, but you didn't. How did you analyze the deal? Were you able to take the contractor into the property before purchasing to have an accurate rehab budget? I think this is the only way to make sure you would end up having a nice profit after all.
2) I understand you borrowed 100% of the purchase price. Did you borrow the renovation and holding costs as well?
3) Did you have to make monthly payments to the private lender, or you paid everything at the end of the deal only?
4) So your contract with the private lender is basically: you give the money, and your money is secured by the property itself. Is that correct? I'm asking because I'm currently looking for ways to finance my first flip as well.
5) Do you use LLCs, or did you do this on yourself? I'm asking because of the tax impacts. Also I'm assuming that the $45k profit is before taxes. Can you confirm please?
So sorry for so many questions, just trying to learn as much as I can. If you're not comfortable sharing all this information in public, just PM me please. Thanks!
1. I've done enough now that I can ballpark the rehab close enough. When you are buying off market you need to make decisions quick or else someone else will snag the deal, you need to be able to make an educated estimate of rehab on the spot.
2. I borrowed purchase price and most of the renovation cost, the holding costs were accrued and paid at closing when I sold the property.
3. I don't use the 70% rule, I use a spreadsheet and plug in all of the numbers and look at the ROI and bottom line profit potential then decide if I want to purchase or not. It is much more accurate this way, I would advise against the 70% rule actually.
4. That is correct. Title company records it as a trust deed.
@Omid A. fantastic work, and congratulations! As a complete newbie I have some questions for you:
1) All the books I've been reading so far swear by the 70% rule, but you didn't. How did you analyze the deal? Were you able to take the contractor into the property before purchasing to have an accurate rehab budget? I think this is the only way to make sure you would end up having a nice profit after all.
2) I understand you borrowed 100% of the purchase price. Did you borrow the renovation and holding costs as well?
3) Did you have to make monthly payments to the private lender, or you paid everything at the end of the deal only?
4) So your contract with the private lender is basically: you give the money, and your money is secured by the property itself. Is that correct? I'm asking because I'm currently looking for ways to finance my first flip as well.
5) Do you use LLCs, or did you do this on yourself? I'm asking because of the tax impacts. Also I'm assuming that the $45k profit is before taxes. Can you confirm please?
So sorry for so many questions, just trying to learn as much as I can. If you're not comfortable sharing all this information in public, just PM me please. Thanks!
1. I've done enough now that I can ballpark the rehab close enough. When you are buying off market you need to make decisions quick or else someone else will snag the deal, you need to be able to make an educated estimate of rehab on the spot.
2. I borrowed purchase price and most of the renovation cost, the holding costs were accrued and paid at closing when I sold the property.
3. I don't use the 70% rule, I use a spreadsheet and plug in all of the numbers and look at the ROI and bottom line profit potential then decide if I want to purchase or not. It is much more accurate this way, I would advise against the 70% rule actually.
4. That is correct. Title company records it as a trust deed.
5. LLC, and yes profit before taxes.
Hope that helps, good luck starting out!
Fantastic Omid! I'm sure your answer not only helped me, but a lot of other newbies! Thank you so much, and good luck!
Thanks for sharing and congrats! As someone who is looking to get into his first flip, I'd love to hear some more details if you are willing to share:
1. Materials - Did you source most of your materials through various stores? Or did you buy most of your items at one store like Home Depot? How much did you price shop?
2. Roughly how much did your subcontractors charge per hour? Obviously there are specialty rates for plumbing, etc, but what about for the other stuff like flooring / drywall, etc?
3. How did you stage the photos? Did you just rent furniture?
4. How confident were you with your ARV analysis before acquiring the property, and how close did you come to hitting those numbers? Would you mind sharing your list price / # offers / etc? I'm always curious to hear pricing strategies and the evolution to the final sale price.
Thanks for sharing and congrats! As someone who is looking to get into his first flip, I'd love to hear some more details if you are willing to share:
1. Materials - Did you source most of your materials through various stores? Or did you buy most of your items at one store like Home Depot? How much did you price shop?
2. Roughly how much did your subcontractors charge per hour? Obviously there are specialty rates for plumbing, etc, but what about for the other stuff like flooring / drywall, etc?
3. How did you stage the photos? Did you just rent furniture?
4. How confident were you with your ARV analysis before acquiring the property, and how close did you come to hitting those numbers? Would you mind sharing your list price / # offers / etc? I'm always curious to hear pricing strategies and the evolution to the final sale price.
Keep crushing!
1. A lot of home depot, local suppliers for millwork/windows/doors, amazon for a lot of the fixtures
2. They charged by the job, not the hour
3. I hired a local staging company, it cost about $1600
4. This house was an easy one to comp because there were several with literally the exact same floor plan, so I was very confident in my ARV projection. I listed for 420k, sat on market for 3 weeks then got an offer at 410k that I accepted
Thanks for sharing and congrats! As someone who is looking to get into his first flip, I'd love to hear some more details if you are willing to share:
1. Materials - Did you source most of your materials through various stores? Or did you buy most of your items at one store like Home Depot? How much did you price shop?
2. Roughly how much did your subcontractors charge per hour? Obviously there are specialty rates for plumbing, etc, but what about for the other stuff like flooring / drywall, etc?
3. How did you stage the photos? Did you just rent furniture?
4. How confident were you with your ARV analysis before acquiring the property, and how close did you come to hitting those numbers? Would you mind sharing your list price / # offers / etc? I'm always curious to hear pricing strategies and the evolution to the final sale price.
Keep crushing!
1. A lot of home depot, local suppliers for millwork/windows/doors, amazon for a lot of the fixtures
2. They charged by the job, not the hour
3. I hired a local staging company, it cost about $1600
4. This house was an easy one to comp because there were several with literally the exact same floor plan, so I was very confident in my ARV projection. I listed for 420k, sat on market for 3 weeks then got an offer at 410k that I accepted
Awesome.
Appreciate you sharing the info. It's always fascinating to hear how every one goes through stage-by-stage!
Awesome job @Omid A.! Out of the $65k invested, how do you feel you could have lowered that amount? Did you overpay for any services or have trouble finding certain trades to complete the work?
Obviously you did great, but i'm looking for some extra learning points! :)