My first flip, Farmington Missouri

[Chris Marshall]

Investment Info:

Single-family residence fix & flip investment in Farmington.

Purchase price: $35,000
Cash invested: $120,000

A full remodel on a Victorian style home in our downtown area. I learned much as it was my first flip. we had to gut the entire home and jack a portion of the second story up. there was much to the project that i didnt account for since i didnt know any better but all in all im glad i did the deal. i was able to purchase it for $35k from a local investor that buys multi family home conversions. this one didnt fit his portfolio so he was willing to part with it for a good price. i originally thought id only need to put about $60k into it but it came out closer to $120k. The house appraised for $179k after i was done but i couldn't get it to sell even after i dropped the asking price to $159k so i put a renter in it for the time being. I had to work out a deal with the bank to allow me to make only $650/month mortgage payments for the first 2 years so that the property could just barely take care of itself. The renters are supposed to be purchasing the house in august of 2020 which is just a few days away from me writing this.

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

I was very eager to finally do my first deal and I already was a GC in my area so I decided to go with a flip.

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

My wife as a hairstylist actually has a large network of customers that she speaks to about how we wanted to get into real estate investing and one of them told us about this property and i immediately went to it and got in touch with the seller and got it under contract.

How did you finance this deal?

We secured a HELOC on our personal house for the down payment and remodel, then a conventional loan for the purchase price. We went over our budget in the middle of the project so we had to go back to the bank and refinance some of the money we had on our HELOC back into the mortgage of the property. As the tenant moved into the property we refinanced a portion of the HELOC into the mortgage for a second time. so i guess we BRRRRRR'd it. Bought it, Reno, Refi, Reno, Rented, Refi, repeat.

How did you add value to the deal?

Forced appreciation by completely redoing everything in the house. much of the house was stripped to the studs to redo all of the electric, plumbing insulation, layout, walls, ceiling. It was a long process for my first flip and i probably wont do that much work to a flip again.

What was the outcome?

It currently sits rented out by a tenant that is supposedly going to be purchasing it within the next month of writing this.