First Fix and Flip Deal

[Garreton Smith]

Investment Info:

Single-family residence fix & flip investment in Albany.

Purchase price: $94,000
Cash invested: $60,000
Sale price: $225,000

My first fix and flip deal! Single-family needed to be gutted and updated. From the flooring to the walls we replaced everything!

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

A goal of mine was to complete two fix and flips deals for 2020. I wanted a deal that I could add a lot of value to.

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

Online Auction Hubzu.com. No negotiating

How did you finance this deal?

Hard money lender. 30% down LTV

How did you add value to the deal?

We gutted the property and added everything new. Walls, floor, kitchen, bathroom. I have a before and after video

What was the outcome?

Flipped for a little less than expected. But still made a profit.

Lessons learned? Challenges?

Ugh, where do I start?
1. Always check plumbing and electric work first. I thought I lived in a world where a property that's been vacant for 3 years needed no plumbing or electrical work. I found out quickly I wasn't being realistic.
2. Never overcompensate the contractor, I paid a lot upfront and he started dragging his feet. I fired him halfway through the process. Always have a backup plan.
3. Time is money, be smart when starting rehab. Adhering to timelines!

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

Trevon Williams Albany, NY Realtor

[Steven Luttman]

Congrats on the success @Garreton Smith. How hands on were you during the rehab process? 

[Garreton Smith]

@Steven Luttman I was pretty hands-off- I popped in on the workers every now and then. It was a 2 hour commute for me. I live in NYC. I did gut the place myself that was fun !!

[Dustin Thoms]

Where did you find the hard lender?

[Garreton Smith]

@Dustin Thoms I actually had a list of hard money lenders from this real estate expo I attended in NYC. So I called all of them and see who would lend to me being a first timer and what terms.

[Sharlene Mulchandani]

@Garreton Smith Congratulations and thanks for sharing!

[Aditya Sharma]

@Garreton Smith Congratulations! I am also a newbie and have offers out on two properties. One of them will be a complete gut..1200sqf. How many square feet was your house?

[Nikolay V.]

Thank you for sharing  your experience. I am also just started. Let me ask you, did you find a deal first and lender second?

[Garreton Smith]

@Aditya Sharma Nice hopefully one offer pulls through! It was a single-family two-story house 1,624 sq ft house.

[Garreton Smith]

@Nikolay V. Great question! This deal was actually pretty crazy. I was on Hubzu looking one day. I found this property, did a quick review, and compared comps. Told myself it would be a good deal, and I legit just bid on it just to see what would happen. I ended up winning the bid! Now I'm like Holy Crap I don't have 95K to close on this haha. That's when I found the money. I just jumped in and figured everything out on the way! I wish I could do a deal deep dive for this deal lol. 

[Nikolay V.]

Thank you!

[Sean Han]

@Garreton Smith Congratulations! You are a brave man! I wish for more great deals in near future. How was your experience with the municipality? I heard Albany can be tough in getting permits and work done on time.

[Alexander Gonzalez]

Great work Garreton!

Sounds like a hell of a hit to kick off your flipping business.

After experiencing the problems you encountered with your first contractor, could you share a little bit on the topic of how you plan on structuring your business when dealing with contractors in the future? Did you ask for a Scope of Work? Structure some sort of payment agreement as certain items are completed throughout the rehab?

[Dmitriy Fomichenko]

@Garreton Smith great job, congratulations!

[Garreton Smith]

@Alexander Gonzalez Great question, moving forward I'm only going to work with contractors with skin the game. Whether it's the contractor coming out of pocket some money and getting reimbursed. Also, I will never give a contractor a large payment every again. All payments will be in smaller increments. Lastly, the contract I will put some language stating legal ramifications if they try to pull a fast one. 

[Garreton Smith]

@Sean Han Honestly if you do everything by the book, you should have no issues with the city. I had a pleasant experience. They came out on time at every appointment.