New fix and flip with new additions

[Tj Cremeans]

Investment Info:

Single-family residence fix & flip investment in Birmingham.

Purchase price: $295,000
Cash invested: $140,000

We purchased this 2/1 that was at 915 Sqft ranch home and adding 1700 sqft to the home. Brand new second story added along with a newly finished basement and main floor addition.

PP- $295,000
Rehab - $140,000
ARV - $770,000

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

We wanted to find a location that allowed us to do a large value add without reinventing the market. This area was perfect for that as every fourth or fifth house is under construction. Mostly new builds in the 1.2-1.4million range and ours will be at a softer price point of 800k

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

The deal was found on the MLS. We went to the house with our contractor. We saw it had good bones and the neighborhood potential. Put an offer in contingent on inspection. We found a big issue with the water line so we negotiated down to the purchase price.

How did you finance this deal?

Hard money covered 90% of the purchase and 100% of the rehab. We brought on a PML for the holding cost and down payment. 0% no money out of pocket to cover this deal.

How did you add value to the deal?

We always get an ARV appraisal on our properties to be able to justify our comps and confirm our hard numbers.

Lessons learned? Challenges?

We learned to have the architect, engineer, and planner to all get together during the due diligence to speed up the process and not have a long hold time of no construction. BE FRIENDS WITH THE CITY PLANNER!