$55,000 tax-free profit on our first live-in flip!!

[Ryan Luby]

Investment Info:

Single-family residence fix & flip investment in Seymour.

Purchase price: $165,000
Cash invested: $18,500
Sale price: $215,000

This was a live-in flip, we were able to keep the rehab numbers super low because my wife and I did all the work ourselves, and the house was in good shape originally. Roof was good, furnace was relatively new and clean, electrical was in good shape and the service was new with plenty of room on the panel to add breakers. The work needed was mostly cosmetic which allowed us to really focus on spending our time and money on areas of the home that would eventually create our great return.

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

It was a foreclosure, in our desired location which checked a lot of cliche boxes for us. Cheapest, smallest house in arguably the best neighborhood in town, close to a school. Next we reviewed big expense items like all mechanicals of the home (heat source, electrical, plumbing, oil tank, foundation, roof, siding, windows, water and waste sources) All those expenses were in good shape which made this a great opportunity. Still, the focus remained on buying a house that would not lose money.

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

We found this deal while walking our dogs in the neighborhood. And reviewing it on zillow at the time.

How did you finance this deal?

We got an FHA loan for the property because it was in good enough shape to get that type of loan, which allowed us to only pay around 3.5% at closing.

How did you add value to the deal?

After addressing minor plumbing and electrical repairs, and replacing the water heater, we fixed up the lot and I worked to grow nice grass and maintain the landscaping. The big contributors were the remodeled kitchen, with backsplashes, tile floor, refinished cabinets, open shelving, new fixtures. A remodeled bathroom, tile floor, pedestal sink, new toilet. We re-painted everything and then added great decorations and staging throughout.

What was the outcome?

Fortunately the outcome was a great return on our very little home. And since we lived there for two years the profit was tax-free. Also since I'm a contractor and realtor we saved a ton of money on the repairs, and received 100% of the commission to sell the property which added to our profit.

Lessons learned? Challenges?

First and foremost... we remind ourselves how lucky we were. The goal was always to buy a house that wouldn't lose money and even though we followed some important strategies to buy a good deal there are no guarantees. The main reasons we were able to realize the potential of this home (*Other than the key of buying it right) was my wife helping, me being a contractor, and being a realtor/investor because I stay on top of evaluating homes, I was able to understand when it was a good time to list

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

I didn't for this deal. Fortunately I have a large family of tradesmen who I consider to be my old wise men. I try to pick their brains anytime I can, and rely on their knowledge and experience when needed. I was getting my contractor and realtors license when we were first buying this home so this was a great practice home for us in so many ways. I literally listened to 100's of BP podcasts while fixing this home up, and implemented everything I learned into making this deal a success.