Multnomah Village Fix n Flip - success story

[Jorge O'Farrill]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $310,000
Cash invested: $96,000
Sale price: $511,500

Fix and flip, walking distance from Multnomah Village. LVT flooring throughout, a modern kitchen with backsplash and quartz counters, double pane vinyl windows, custom baths with tile, lots of natural light, sliding doors off master to rooftop deck ready to be personalized, and a spacious backyard. Additional features include new SS appliances, recessed lighting, new 200 amp panel and updated electrical in kitchen, a French drain system, and 1 car garage w/ workshop.

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

I have been a real estate investor for years and in the last few years since getting my real estate license I have been working mostly with residential consumers. A local wholesale investor had this property available and the numbers made sense for me and it's in a great area. With my knowledge of the market I thought to myself "how can i lose?"

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

There was not a lot of negotiating. The wholesaler I purchased it from has a specific price in mind and whoever puts the earnest money down first gets it. We were able to negotiate some discounts for some damage to the siding they were not aware of and also underground storage tank decommissioning which had not been accounted for in their initial walk through. I believe they went back to the original seller and got their money back there.

How did you finance this deal?

We used hard money for 85% of the purchase + rehab cost. My GC funded the renovation costs and I had a private money investor with a small amount that contributed. We used the private money investors capital to pay for holding costs and keep us cash positive on the deal until we were able to close.

How did you add value to the deal?

It was a full cosmetic renovation with what I would call standard upgrades, floors, paints, windows, baths, kitchen, appliances, landscaping, etc. We had to make repairs due to significant dry rot damage around the windows, replaced half the siding (we were able to match existing), and then we also upgraded the electrical and plumbing.

What was the outcome?

I would call it a double using the baseball analogy. We made a decent profit on the deal. The hardest part and what kept it from being a home run in my books is that it took us 6 months to complete. This was in part because my GC was paying for the renovations from his purse and we went over budget by about $25k and between managing his cash flow on other projects and just this being the first time he did a flip, it took us 3 more months to finish than I projected. We sold to a cash buyer, easy.

Lessons learned? Challenges?

I did not have full control of the repair money due to it coming from my GC. That proved challenging to manage in terms of expectations and timelines. If he had not been funding the renovations, I would have fired him and hired a different contractor. In the end, it was still a success.

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

I'm a local real estate agent (Principal Broker) and I would definitely recommend myself if you want to invest in this area (wink)! Especially for flips, or multi family (residential or commercial).

My hard money lender was Rain City Capital and I work with Chris there. I'm doing another deal with them currently and I would definitely recommend them if you need a financing option.