1st Flip Success!!! in a very hot market

[William Good]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $100,000
Cash invested: $27,500
Sale price: $178,000

This is a 2 story 1800 sq ft house that had been let go to the animals. It has 4bd/2 1/2 ba, Granit and stainless kitchen, formal dining plus breakfast nook, wood burning fireplace, 2 car garage and privacy fence. The owner no longer lived in the house, but was still paying the mortgage. There were 9 cats and 2 full sized dogs that lived in the house. Someone fed and water the animals regularly. The dogs were penned into the dinning room with fencing attached to the walls and the cats were left to roam most of the house. The house had very good bones and needed serious cleaning and cosmetics.

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

There was clearly room in the deal to take care of any unexpected repairs. We worked with a local agent to find this off market property and had a home inspection done to give us a level of security in knowing what needed to be fixed. We also had my personal Heat and Air team come take a look at the system to make sure it was fully functioning and without any leaks.

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

We called on one of our best real estate brokers, someone that we have had a relationship with for a while, and asked if he had any off market properties that needed some cleaning up and if he thought the property would have enough in the deal that we could profit. He had one that was 2 blocks from my daughters house in one of the hottest markets we have had in a while.

How did you finance this deal?

We used our IRA funds at Equity Trust to buy the property for cash

How did you add value to the deal?

We cleaned up all of the exterior, to include mold removal, pressure washing the driveway and fence, removed all flooring in the house, put down engineered wood flooring, new carpet, new stainless hardware, all lighting was upgraded LED fixtures, new paint, Crown Molding, painted wood toned cabinets a light color of Gray, cleaned the air ducts from all of the pet hair and used a lot of order mitigation

What was the outcome?

We were fortunate that a realtor was flipping a house right next door to us and asking about $10,000 more for his house than we intended to ask for this flip, Our original plan was to offer the house at $168,000 knowing that it would probably sell pretty quickly. The house next door sold in 2 weeks from the time it was put on the market. We put our flip on the market at $172,000, it sold for $172,900 in 12 hours. We probably could have asked for more

Lessons learned? Challenges?

So many lessons learned in using my IRA to fund the deal, but all of it built our confidence in funding more deals or teaming with others to fund the deals

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

We used an agent for the purchase and the sale of the deal. We are considering becoming agents and then brokers to reduce our expenses in these deals. We plan to ramp up a lot more in 2019