First Flip: Profit in Pocket, Lessons Learned

[Nikki Kofkin]

Investment Info:

Single-family residence fix & flip investment in Chicago.

Purchase price: $80,000
Cash invested: $71,947
Sale price: $213,400

Partner deal, 50/50 split of profit. Very glad I didn't have a loan on this one since it took a year from purchase to sale which was definitely not anticipated. Listed at $219k at the end of Jan 2020. Rehab took longer than expected. After two weeks on the market we did a price reduction to $209k. After being on the market two months with no movement, we took it off the market and and shot new spring photos, a video walkthrough, and did virtual staging.

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

I saw another home in the neighborhood very similar to it that was under contract and showed good profit margins. I should focus only on closed not under contract comps though I know better than that being an agent, that was a little risky. The home I was using as a strong comp ended up being on the market for an entire year as well and closing just a month before us. I don't want my money tied up in a flip for a year in the future.

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

MLS. The mother living there needed to move into assisted living, so the family was motivated to sell. We gave them an easy and quick way out.

How did you finance this deal?

Cash.

How did you add value to the deal?

Market knowledge of comps, attention to detail, keen eye for design, capital

What was the outcome?

When we came back on the market, we quickly had a contract and a backup offer. Both of them fell through so we came back on the market again. We had a great offer the same day. But we got over asking price because we put a new roof on for the buyer, and he walked away from the closing with a check in hand because of the closing cost credit we gave. In the end, still made a profit, we each made about $25k. Could have been worse!

Lessons learned? Challenges?

It was a buyer with a VA loan who was still active duty in Germany. He was having trouble getting a document that the lender needed which delayed closing about two months. He should have had power of attorney. We didn't realize he was located in Germany until near the end. Not bad for the first flip!