Rehab property went terribly wrong and super good!

[Gianni Mesia]

Investment Info:

Single-family residence fix & flip investment in Kansas City.

Purchase price: $39,000

Cash invested: $40,000

Sale price: $129,000

Bought it for 39,000. We spent around 40,000 on repairs, plus some more cash for holding costs. It took us around 5 months from purchase to selling it.
We rehabbed about 10,000 of work a week and finished the remodeling in a little over a month.
I don't have the before pictures where it shoes how terrible of a condition the property was in. The pictures are "during the rehab" and right "before the open house."

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

The property was close to UMKC and Rockhurst University.

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

We found the deal through other investors. They knew the price was really cheap, but they were afraid to take such a big job. 40K of work is not much in certain states, but in that property 40k meant that it would have to be guttered and rebuilt.

How did you finance this deal?

before any deal, I was looking for lenders through friends who referred me to people with capital. I was rushed out again and again. I decided to stop doing that and go meet with people in real estate investing meetings. During those meeting I met people wanting to do real estate but who were apprehensive about starting. I met a couple who had capital but were afraid to buy properties themselves. I showed them how we could make sure the deal we do will be a WIN. they ended up lending the money.

How did you add value to the deal?

We (business partner and I) rehabbed the property. The total cost was around 40,0000

What was the outcome?

We were able to buy the property, rehab it, and sell it within 5 months, we pay the lenders with their 12% interest back and thanks to that deal we got other lenders interested which later on lent money for other deals.

Lessons learned? Challenges?

The biggest challenge was that when we turned the water on the weekend before the Open house, a pipe was broken. We had to dig from the front yard to the basement and fix things.
It added extra costs to our rehab, the good thing is that when i did the number to put an offer i added an amount for OOPS factor (unprecedented problems). The saved us from losing on a chunk of our profit.