First Official Flip of Townhouse/Condo

[Ryan Hollingshead]

Investment Info:

Single-family residence fix & flip investment in Dallas.

Purchase price: $91,000
Cash invested: $45,000
Sale price: $189,500

Hey Everybody,

Wanted to share my first official deal, and by the grace of God it was a success!

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

I am a professional soccer player for FC Dallas located in Frisco, TX. Due to my schedule, I am able to invest in real estate on the side, and have been doing so for the last couple of years. My prior strategy was to House-hack, buy a property to live in and fix up and then rent out rooms. But this was the first Flip that I had done without ever living in the property, my first official flip.

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

So to find this property, I spent about 6 months building my team. Finding a Deal Finder, a Contractor, Lender, Agent. The first part of that process was finding a deal finder, so I reached out to every wholesaler I could find in my area of Dallas, Texas. After connecting with them, I was put on their investor list and was sent off-market deals. After combing through hundreds of emails and deals, all of which were much too tight to work, I found one that had numbers that seemed to work!

How did you finance this deal?

So I jumped on it, and had to get it financed quickly. I created a good relationship with an investor friendly bank but they were wanting me to get a deal under my belt before they financed one of my flips. I also needed to close quickly, so I went the hard money route. They were able to close in less than a week, and charged me three points origination and 12% interest. I paid a lot for private money, but the numbers still worked out great for me, so I couldn't worry

How did you add value to the deal?

The townhouse was in terrible shape, but had good bones, so we were able to add a lot of value just through cosmetics. Everything exterior was taken care of by the townhouse HOA, so the roof, siding, yard was in good shape. But we rehabbed the entire interior, floors throughout, two new bathrooms, new kitchen cabinets and appliances, recessed lighting, new A/C, new furnace, garage door. Almost everything had to be fixed inside.

What was the outcome?

So here are all the numbers:
The wholesaler was asking 95k, I offered and bought it at 91k
Hard Money Loan for 90k at 3 points and 12% cost me 5k
Closing costs on purchase 2k
Rehab 44k
Sale Price 189,500
Closing on sale 5k
Agent fees 10k
Purchased October 15, Sold December 14th (2 month hold time)
Total Net profit 32k

Lessons learned? Challenges?

The biggest lesson I learned that it doesn't matter how much everybody else numbers are, if the numbers work for you, then it's a deal. The wholesaler made 16k off the assignment, the hard money lender made 5k in two months, my contractor made some good money, but that should be seen as a positive since the numbers still worked for me even after all of that, and I was able to make 32k.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I was also able to build a great team, or as bigger pockets calls it, core four. Which means that now that I have the right people set up, I can replicate this over and over. I have an amazing contractor, an awesome agent, a great lender that I will be able to use next time, so the next one will be that much easier!