First Investment Deal

[Stuart Tollison]

Investment Info:

Single-family residence fix & flip investment in Indianapolis.

Purchase price: $80,000
Cash invested: $36,000

Currently 3 days from closing on my first live-in flip. Located in the historic Bates-Hendricks neighborhood.

What made you interested in investing in this type of deal?

Wanted to start with flips for a quicker ROI due to close relationships with contractors. Plan is to start with flips but ultimately want to move to multifamily rentals.

How did you find this deal and how did you negotiate it?

Deal was found on the MLS and negotiated through an agent.

How did you finance this deal?

Financed through an FHA 203k rehab loan.

How did you add value to the deal?

$35,000 in initial rehab through 203k loan. Unfortunately, most of the rehab costs have gone to structural updates. (Completely new roof, replacing floor joists and seal plates in basement, all new flooring throughout main level) Will continue to add value updates such as new counters, bathroom updates, new fixtures, etc.

What was the outcome?

$80k purchase price. $36k in initial rehab. So all in right now at $116,000 (not including closing costs). Property just appraised for $123,000 with no true value adds. Probably not a great deal to the experienced investor, but I'm learning a lot throughout this process. With another $20k in rehab over the next two years, we're projecting an ARV between $180,000 - $200,000 based on current comps.

Lessons learned? Challenges?

Try to avoid structural rehab and be cautious with "Sold as-is" properties. The property looked good structurally at first glance, but after inspections, realized the house would need more work to bring it up to code than we initially thought. Decided to continue with the deal for a few reasons: Still has value, very high growth area, and LEARNING EXPERIENCE.