First deal fix and flip in MD

[Lucas Mobley]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $100,000
Cash invested: $8,000
Sale price: $174,900

Single Family Home in Historic District
3br 1.5br Colonial
9ft ceilings
Original window and door trim
2 story

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

Making all the wrong choices when I was younger hasn't allowed me to break past the lower middle class. It was the only feasible solution to gain enough capital to potentially have a shot at securing a solid cash flowing multi unit rental property and begin a portfolio. It also helped me to gain some legitimacy and experience along the way.

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

Had an issue with a long time landlord and my fiance and I needed him to get us into a different rental fast. He had just evicted the previous tenant of the property. It was eccentialy condemnable and he gave us a good monthly lease of 1000 (would have been 1300-1600 in good condition) for agreeing to clean the house thoroughly. He also knew we were great tenants. Knew he only paid 40k for the place in 2016 so I offered him 100k for it. He laughed and said sure, "if you can get the money...".

How did you finance this deal?

First home purchase ever and secured loan with USDA backed financing. I only had enough to cover an appraisal and inspection. I didn't even have enough to cover closing costs. I had that financed as well. Made it to settlement by the skin of my teeth (debt to income ratio was excellent) after being underwritten twice.

How did you add value to the deal?

Needed paint throughout, every faucet and toilet replaced, new stainless appliances, total exterior face lift, new hotwater heater, new textured laminate flooring, crawlspace treatment, and over all attention to derrered maintenance. That's only about half of the work. Kitchen and br cosmetic upgrades also.

What was the outcome?

I go to settlement in 6 days and barring any unforseen complications, I'll clear around 55k after fees.

Lessons learned? Challenges?

I learned to hire the best inspector you can find. Even if you feel you're competent and know the property, a seasoned set of eyes never hurts. The biggest challenge was doing a fix and flip with no money while also having to live in it and maintain full time employment to allow the "fix" part to happen lol lots of PB and Js.

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

Yes