Santa Rosa Sound Fix and Flip

[Denis Ryan]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $290,000
Cash invested: $180,000
Sale price: $690,000

This 2,750sq ft home on the Santa Rosa Sound had been severely let go, but we could see enormous potential. It was also going to be at least a 2yr project, so we decided to live in it while we remodeled (it took 2.5yrs). With original design features that severely obstructed the view of the water (not to mention, that the yard was so overgrown with pine trees, you couldn't see the water anyway!), we wanted to open up the space and make the most of those amazing water views!

We set about opening up the internal space, removing internal walls and doors in the kitchen/living area and reversing the master bedroom and bathroom. Updating everything inside, we added some custom made features like the tabletop, faux beams and mantle made from peccy cypress reclaimed wood. We now had panoramic water views from all the major rooms in the house. Outside we cleared the pine trees and brush, raised the sea wall and landscaped a beautiful backyard to enjoy the $million sunsets! From the outset our investor was happy with the business plan and long hold time and more than happy with his ROI of 18.35%!

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

I could see huge potential because of the location. The chance for my family to live on the water while I fixed it was a huge incentive, as was not having to pay capital gains once we'd lived in it for two years. It was also a huge challenge, that I was eager to take on.

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

My Realtor, Jen Purdy of Coldwell Banker, brought it to me. It was listed on the MLS. My analysis on what I thought I needed to spend for repairs and what I thought I could get for ARV told me the price I needed to get for it. We were able to negotiate down $40,000 to get that price. We ended up adding to our original renovation plans and spending more, but we also sold it for a lot more than I first anticipated, so it worked out.

How did you finance this deal?

A friend loaned me the money. I was very uncertain about how long it would actually take, so I did not want to pay interest and worked a deal with him where we would split the profit 50/50. It worked out for me as I would have paid a lot more had I done traditional hard money financing. My friend also did really well with his 18.34% ROI, so we were both happy.

How did you add value to the deal?

By opening up the inside and reversing the master bedroom and bathroom we opened the house to the stunning water views. The sunsets from October through February are truly incredible. The location has some extremely unique characteristics that were not being exposed before. Obviously updating everything also added value.

What was the outcome?

It took longer than I wanted it to and was a huge undertaking, but I felt I rose to the challenge. The experience of living on the water was everything I dreamed it to be and it has only increased my desire to end up there permanently. This house has a special place in my heart.

Lessons learned? Challenges?

Lessons Learned;
1. That while there is a certain satisfaction in doing everything yourself, if you want to make a living out of flipping houses, there are much better ways. While I was there I learned of the many different organizations that offer education and systems (Biggerpockets for one) and that you shouldn't be cynical about them. Educate, educate, educate!
2. Strive for perfection, but accept that you are not likely to achieve it, and be ok with that. A life lesson I am still learning.

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

Jen Purdy, Coldwell Banker, Fort Walton Beach, Fl. Jen is undoubtedly one of the best Realtors in the area and an absolute wealth of information.
Meade Law for Title.