First flip in the books

[Darren Jordan]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $121,500
Cash invested: $54,000
Sale price: $193,000

My partner and I just completed our first fix and flip! Our return was small but the knowledge gained was priceless. On to the next!

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

We were originally looking for a deal to complete the BRRRR method on but the numbers didn't make sense in the end so we flipped it instead.

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

Through a large wholesaler here in Houston. Won the house with a silent bid.

How did you finance this deal?

Partner and I put our money together to purchase it in cash and were able to fund the rehab with cash.

We considered using a hard money lender which I'm grateful we didn't because we likely would've lost money on this deal if we did. We gave ourselves a larger than normal timeline for this project as this was a part-time deal for us and needed to prospect different contractors.

How did you add value to the deal?

This property was in very bad shape, we nearly had to rip most of the house down to the studs. Other than structural / foundation areas we touched just about everything in the property. Brand new interior/exterior paint, windows, cabinets, counter-tops, trim, floors, plumbing, HVAC, water heater, and the roof!

What was the outcome?

We originally ran our analysis on the property at an ARV of $185k prior to buying it which at the time we thought may be more on the optimistic side but felt it was doable. By the time we were ready to list it the market just began to heat up and with our property much nicer than any of the other comps we decided to list it at $199,900. We received a full price offer in 1 day! After our appraisal fell short, we ended up only getting a 5% ROI and sold the house at $193,000.

Lessons learned? Challenges?

I need to find better deals! The wholesaler we used was quite a large outfit in Houston. I have no animosity toward them but after closing this deal and after evaluating several other properties of theirs they really don't leave much room for error, if any, to make a decent return.

Luckily we set our expectations low. We told ourselves as long as we don't lose money we had won. We truly took this first deal in as a learning experience to set us up for the next one.