Flip House turned BRRRR

[Will Fraser]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $63,500
Cash invested: $120,000

This was a flip house that went sideways thanks to a horrible liar of a contractor, a pathetic real estate agent, and a Sovereign Guide who is never surprised. Instead of selling and recouping the costs of hiring the wrong contractor, we're sinking our savings into it and holding it as a relatively high producing rental.

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

For our first flip we wanted to buy something we knew we could add value to, and which had lots of cushion in case our stupidity and green-ness cost us dearly. It did, so we're glad to have had the cushion.

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

We found this on the MLS and negotiated it agent to agent (I am an agent and the seller was an agent, so that was nice, haha)

How did you finance this deal?

We used a construction loan for the purchase and rehab (85% of purchase price and 100% of rehab up to 75% LTV or 85% of total project cost, whichever is lower).

How did you add value to the deal?

Total rehab. . . everything. Foundation, plumbing, electric, HVAC, reconfiguring the floor plan, etc.

What was the outcome?

A top quality home in a highly desire-able area of town! We intended to sell, but ended up holding as a rental for the next chapter.

Lessons learned? Challenges?

Vet your people well, fire fast, and know your numbers. You can't build in too much "Just In Case costs" (except you'll eventually price yourself out of relevancy on your offers). Too many other things to mention here.

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

Absolutely! First United Bank's construction loan process (and double-closing setup) is fantastic, and Paul Little Construction was Mr. QB that saved my skin on the job. Since we started a year ago we've done at least 4 flips together and he's been a steady, dependable QB!