Finished Two Rehabs in One Year!

[Gabriel Ehrlich]

Hello BP, I am a part-time real estate investor in the Baltimore, MD area. I have wanted to do a post of my REI successes for quite some time. First, I really want to thank the BP community for being so supportive and such an inspiration. For everyone out there reading this thinking "can I do this?" the answer is yes, absolutely. I did not have thousands of dollars saved up, I didn't have a millionaire partner and I didn't have someone in the family showing me what to do. I studied – literally read hundreds of BP posts, any real estate books I could find and listened to podcasts for 2 years straight before doing anything (probably overkill). Anyway, the more I talked about my desire to flip houses the more people I met that knew someone, that knew someone in the business. After speaking with countless agents, investors and contractors in my area, I found a mentor to help me take the plunge. He was able to give me the confidence I needed to take on my first house.

First House

The first house I did was a single family 3br 2.5 ba with a 1 car garage. It was built in the early 90’s so everything needed to be replaced cosmetically. New hardwood floors throughout main level, new kitchen, removed wall between dining room and kitchen, recessed lighting, new tile work and fixtures in bathrooms, drywall point up and paint, new hvac, new interior doors and hardware, new carpet. We also staged the house ourselves.

Here are the numbers:

Purchase price: 93k

Close cost: 10k

Rehab Cost: 43k

Sales Cost: 22k

Holding costs (Insurance/bge/hard money interest and point): 5k

Sold: 195k (4 contracts in first week)

Net Profit: 22k

Total length of rehab: 4 months

Here are the pics:

Before:

(I will post these later, have to dig them up)

After:

Second House

After my first flip, I decided to give a rental a try. Ultimately, my goal is to own a large portfolios of rentals, for me, flips are just a means of generating additional funds to obtain that goal. Rentals also provide a means of protecting some of my flip income. To purchase the property, I used the profit made on the flip and took out a line of credit. The house is under 1000sq ft with 2 br and 1 ba. It's in an area of the city that I would consider "decent." I used the BRRR method for this one.

Here are the numbers

Purchase: 55k

Close Cost: 5k

Rehab costs: 22k

Holding costs (taxes, insurance, interest on line of credit): 3000

ARV: ~120k

Total length of rehab: 3 months

Rental Income: $1300 a month (renters move in March 1)

Refinance: I plan to cash out refi in March, assuming the appraisal come in at 120k, I will be able to pull out 90K, which would leave with an additional profit of 8k (some of that probably will go towards refinance closing costs)

Here are the pics

Before:

After:

I GC’d both of these projects myself. This was the best thing I could’ve ever done because I have 0 construction experience. By GC’ing this myself and hiring my own subcontractors, I learned about construction processes, materials, pulling permits and order of work. I will say this, if you don’t have a mentor or someone you can trust to help guide you through the process, stick with a General Contractor. I am no construction expert, but, I do feel confident in my ability to accurately estimate rehab costs and “talk shop” with subcontractors. I’ve developed some systems that help me quickly assess rehab costs and manage projects from a distance. I look forward to refining my systems and processes continue my growth as an investor.