First Fix & Flip - A Good Wholesaler Deal!

[Will Kaufmann]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $131,000
Renovations: $31,500
Sale price: $212,000

@Joshua Frahm and I partnered up on our first deal for a rehab in Sanford, NC. The deal was brought to us by a wholesaler and ended up being relatively painless and a lot of fun. Seller actually had a real estate agent involved on their end, although the deal was not on MLS. Original ask started at $140,000 and we tried to negotiate to $125,000 with not much movement. Seller came back a few weeks later and agreed to $129,000. Our private money source only needed a 5% return and it was a short hold - about 3.5 months.

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

Looking to get experience with our first fix and flip in a relatively low risk deal.

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

The deal was brought to us by a local wholesaler with good market knowledge and connections.

How did you finance this deal?

Hard money for 80% of the purchase price, and 100% of the rehab cost. $20,000 personal investment. $26,000 private money to bridge the gap between our $20,000 investment and the remaining cash required to fund the deal. 

How did you add value to the deal?

Managing the financing and renovation.

What was the outcome?

The investor made a small return of 5% and wanted to be a part of our first deal to get the company moving in the right direction. We received a cash-on-cash return of 100%

Lessons learned? Challenges?

Extra attention to detail with estimating rehab costs. We budgeted $25,000, which was about 20% below our actual cost of $31,500. The seals on the windows were all shot (20+ windows) and it was an overlooked cost, which ended up accounting for an additional $4,100 in addition to other miscellaneous contingencies such as the garage door repair and appliances, which we simply forgot to include. We had a GREAT agent on the sell-side, which resulted in a sale price of $212,000, above our projected ARV of $199,000. We could have had better market insight on the front-end if an agent was on our team.