My First Flip: Riverwest Revival

[Emily L. Wiersema]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $78,000
Cash invested: $115,000
Sale price: $250,000

I bought this 1890 single family 3 bed 1 1/2 bath 1500 sq. ft. house in September and it needed it SO much work. I wanted to maintain much of the character while offering modern fixtures with a contemporary/farmhouse aesthetic. It received a completely new exterior as well as two gutted bathrooms and MANY interior cosmetic updates.

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

The purchase price was too good to pass up! I had been looking for a while and the market was competitive so I decided to just take the plunge! The neighborhood is great and I knew the market was strong.

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

I found it on the MLs and moved fast. I viewed the property and submitted an offer within 2 days. I had been working with an agent and had already put it offers on several properties and was outbid. There were plenty of solid offers for the seller however I was willing to give them a 60 day close and allow them to give time to the tenant to move out. Other investors wanted to close fast and I was able to give the seller what they needed.

How did you finance this deal?

Since it was my first flip I financed this deal with a rehab loan from a large lender. It covered the purchase price and rehab costs to the property. I had money saved for a small down payment and contingency budget for additional work. I spent all of it, but will make it back on the sale.

How did you add value to the deal?

It was a 3 bed 1 1/2 bath home when I purchased it and I turned it into a 3/2. There was large unused square footage in a den off the master bedroom and we turned it into a master retreat with master bath, and walk in closet. Additionally I completely refinished the exterior including new roof and siding and windows. I also upgraded many of the features on the interior including two gutted bathrooms and many cosmetic updates.

What was the outcome?

Given the market today it was great! I sold the property in less than 24 hours on the market and over the asking price! I will turn a nice profit however I have a few expenses to pay myself back for which I didn't totally factor in in the beginning like the interest lost on paying the mortgage and other carrying costs. I'm glad there was such a cushion to be able to account them!

Lessons learned? Challenges?

I learned soooo much! I always told myself even if break even on my first property the only thing I'll have lost is time. Rehab loans are paperwork intensive make sure you contractors can handle it. Run the numbers a million times and then run them a few more just to be safe. When picking contractors you have three options: quality, price and service/communication. You'll only get two...which are most important to you.

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

My real estate agent Caitlin Nankee with Shorewest Realtors was amazing! She was patient, knowledgeable and talked through all my worries. She is super responsive and organized. I also worked with an amazing general contractor Jek with Abacus Construction. When I mentioned you only get 2/3 with contractors...they are the rare exceptions. Great communication, price and quality of work. They both saw me as a partner and wanted to ensure my success. I will work with both on my next project!