No Money Out of Pocket Flip

[Tyler Hungerford]

Investment Info:

Small multi-family (2-4 units) fix & flip investment in Riverside.

Purchase price: $240,000
Cash invested: $78,000
Sale price: $470,000

Fix and flip property in Downtown Riverside. A guy I was a huge fan of in real estate investing (Aaron Mazzrillo) was trying to wholesale this property out on Instagram for $260k. I contacted him, told him I could bring in the money to rehab the project along with the contracting crew to fix the place up and ended up doing the deal with him as a 50/50 partner. We split $96k on the deal. I had teamed up with another investor to bring in the cash for the rehab funds and split my half with him. Walked away with about $24,000 and didn't spend a dime on the project myself. All I did was put the deal together.

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

I ran acquisitions for a fix and flip firm since 2016. I love seeing the transformation in these old houses and bringing them back to life. Once that fix and flip firm decided to close in June of 2018, I went off on my own trying to find my first flip deal. This came up and I jumped at the opportunity to get a deal done with someone I really admired.

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

I followed Aaron Mazzrillo on Instagram and literally commented on every post he had. He ended up putting this deal out to wholesale it on Instagram and I messaged him about it. Ended up convincing him that partnering with me was his best option. I put together the rehab financing and the contracting crew and we went to work! Didn't spend a dime on fixing the place up either. Ended up bringing in a money partner who walked away with 25% of the profits.

How did you finance this deal?

Aaron held onto the purchase note $240,000 and I brought in a rehab partner to handle the money needed to fix the property. Aaron and I had a 50/50 split on the deal and my rehab partner and I had a 50/50 split on my end of the profits. We ended up splitting $96,000 when it was done. Aaron got $48,000 and I split my $48,000 with my rehab partner. I didn't have to spend a dime on the deal.

How did you add value to the deal?

I watched the property progress and kept everyone up to date about what was going on at the project. I helped put all of the money together. Because I knew Aaron didn't have a good contracting crew, I was able to bring in my crew I had used at the fix and flip firm I had worked at. I basically put the deal together and made sure it ran smoothly while also not spending any of my own money.

What was the outcome?

We sold the property for $65,000 more than we originally thought. When we first put the property under contract to purchase and fix and flip it, we thought the overall ARV was $425k. That jumped up significantly by the time we sold it!

Lessons learned? Challenges?

This deal went so well, Aaron and I partnered on another deal, then another, and now I work for Aaron and run acquisitions for him. We've become great friends and I love getting to work in such a great environment.

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