An Accidental Live in Flip!

[Blake Schreckhise]

Investment Info:

Single-family residence fix & flip investment in Lamar.

Purchase price: $55,000
Cash invested: $250
Sale price: $78,000

This was actually and unintentional live in flip. I had just got my real estate license and was still renting. I felt like a fraud to not own a home so my first closing was buying this house as my personal residence. Because it would be my personal residence, was in a rural area, and I was under a certain income threshold I was able to get a USDA-RD loan. This meant I need no down payment and they rolled all my closings costs into the loan. I had paid for an appraisal ($500) and a home inspection ($250) up front and at closing they paid me back for the appraisal so all in it only cost me $250. I was representing myself as an agent so I did get a commission check for $1,650 on top of all that. The repairs were very minimal re-painted the exterior and finished trimming and painting the inside. Lived there for 2 years in which time the local inventory for listings that were livable under $120,000 were very tight. This never hit the market I had a buyer that needed this exactly and got full price the same day I showed them.

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

I had just got licensed as a real estate agent and didn't own my house. Felt like a fraud and I needed to overcome that. Starting in a new career I didn't have a lot of money to work with.

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

My wife found it on the MLS. We actually paid full asking price for it. The seller needed to replace the siding so buyers could get a secondary market loan on it. She refused to do it for a long time then when it would sell she dropped the price from $60,000 to $55,000. We weren't waiting for this to happen just happened to be in the right place at the right time.

How did you finance this deal?

USDA-RD. Loan type for rural areas, buyers with lower income, and you can't own any other homes.

How did you add value to the deal?

We painted the exterior, and finished a few trim pieces inside. Seller had remodeled to the studs on the interior before we got there.

What was the outcome?

Sold it for $78,000 just over two years later when we needed a bigger home for our family. Didn't pay capital gains taxes since we lived there for over two years. Didn't put it on the market had a buyer in hand.

Lessons learned? Challenges?

Even your home can be a huge income maker for you. Don't underestimate the power of real estate even if you don't know the whole picture yet. Getting started opened my eyes.

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

Of course I represented myself so I would certainly recommend Blake Schreckhise, HA!