First Time Flip For The Win!

[Brendan Lawrence]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $92,000
Cash invested: $15,000
Sale price: $162,000

I teamed up with an old friend on this project. He provided he financing and I did the work in the evenings after work. We opened up a livingroom wall, and gave the interior a full facelift, new kitchen/bath, interior/exterior paint job and had the project sold in 36 hours for $3,000 above asking price.

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

Id gotten into construction with the mindset of learning what I can about house building/remodeling so that I could take that knowledge and become a home investor one day.

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

I found the deal through Redfin and was comparing price per square foot ratios throughout town. This property was listing low compared to the other houses in town and stood out.

How did you finance this deal?

My partner pulled a cash out refinance on a property he had just invested in down in Florida.

How did you add value to the deal?

We remodeled the entire house. Kitchen/bath, new trim work and paint job.

What was the outcome?

We profited about $55k before taxes and closing

Lessons learned? Challenges?

I learned from this that the process of trading work for a 50% share of profit was not the best use of time. In a typical situation, had I attained my own financing my margin would have been incredibly higher. Although we had set this agreement up from the start and it needed to be honored, once you added up my time involved to flip the house again my partners time to move money around, I felt that the time to return ratio invested was very unbalanced, even considering their financial risk.

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

I did not.