First time flip; After additional rehab costs surfaced, decided to sell rather than hold as a rental to optimize profits; Reinvested those profits back into the business.

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

I was interested in taking on my first flip out of state where the risk was lower due to capital requirements.

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

MLS; I was able to negotiate down after better understanding the Seller's situation; She was awarded the property through her divorce and needed to net a certain amount to pay off mortgage and keep some cash for herself. Win/Win for everyone.

How did you finance this deal?

Hard money + 10% down. Hard money included both the purchase and 90% of repair costs.

How did you add value to the deal?

An additional bedroom was added. There was also no heating/cooling in the home. A/C and floorboard heaters were added and new windows installed throughout to improve operational efficiencies and mitigate heating/cooling costs.

What was the outcome?

After rehab started, a number of other repairs not previously identified either through the homeowners inspection or my contractor's assessment, surfaced. These repairs exceeded my contingency budget and negated positive rental cash flow. I changed my exit strategy from buy and hold, to fix and flip. The market timing was good in that the ARV increased over 10% during the time it took to complete rehab and sell the property. I got lucky.

Lessons learned? Challenges?

I fired my first contractor due to failure to adhere project schedule and quality of work. Fortunately, I was able to identify this early by paying another contractor to inspect the quality of the work. That inspection was a recommendation of my hard money lender which was golden advice saving me money and time. I found my next contractor by approaching one at the local Home Depot at the contractor desk. He was working late hours on another job. It was clear he was go getter and focused.

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

Mike Fallot, Mortgage Man
Hard Money Lender

Mike was an excellent set of eyes and essentially served as fail safe to confirm that I had contracted and penciled out a real deal. He provided guidance and recommendations as it related to insurance, contractors and risks.