Fix-and-flip in the Urban Core of OKC

[Will Fraser]

Investment Info:

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

Purchase price: $108,000
Cash invested: $17,959
Sale price: $154,900

I purchased this home more to illustrate excellent knowledge and predictability to my potential investor partners than to profit, but there was some of that, too! I brought $10,758 to close and then the remainder of the "Cash Invested" above when to overage in the construction budget, interest on the construction loan, and utilities. This was purchased semi off-market, funded with a renovation loan through a small local bank that funds 85% of the total cost of the purchase + renovation budget up to 80% of the appraised value. Executed

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

In general I'm attracted to flips because quick-hit generation of cash infuses cash into my other deals, so that's a great cyclical thing in my business.. Sell a flip, take the profit and plow it into a buy-and-hold, keep doing it, keep growing!

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

I was the listing agent for this home and I watched two consecutive buyers get it under contract, do inspections (for which I was present), and back out. I was fairly intimately aware of the pros and cons of the home and had a good relationship with the seller, so I said "dude, if you are sick of people waffling, I'll take it and I'm in 100%".

How did you finance this deal?

I used a construction loan with a small local bank. They closed in about 20 days and funded the lion's share of the rehab, along with all the purchase price save for $11,000.

How did you add value to the deal?

We removed a few walls to open up the kitchen, gutted it and custom built a new, modern kitchen, and resurfaced the bathroom. Other than that we added lighting throughout the house, painted, and did some structural work and landscaping.

What was the outcome?

Successful rehab perfectly on time, within 5% of original rehab cost forecast, successful sale at predicted sale price and anticipated Days on Market. All in all it was a successful proof-of-concept job.

Lessons learned? Challenges?

In this job I saw the value of the "middle bid" contractor. I had two flips running side-by-side with two contractors and this contractor was far from the cheapest bid, but the way he intuitively understood the meaning between the lines of what I was sharing with him affirmed that he was going to be a good ally. Now I base my offers on him because If I have to stand on the low-bid's head, I might as well do it myself.

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

Yep, the contractor is out of this world and I'll connect anyone in the market for a great GC with him (DM me) and the bank was competitive on rates and super easy to work with.