4 Takeaways from our first live-in flip.

Every new investing experience comes with a huge serving of education. For me, this education is usually preceded by massive fear and anxiety. The challenge is figuring out how to mitigate these fears and keep moving forward.

That's pretty much how our live-in flip went. After years of thinking about it, we finally jumped in. Our plan included a vague scope of work, to be completed mostly be me (with no construction experience), and a time-frame of 6 weeks. As you might guess, things didn't work out according to this plan. However, they did work out just fine, and we ended up with a renovation we can be proud of.

Here are a couple things we learned from the bumps along the way. Hopefully you can avoid some of the mistakes we made

MLS deals are out there if you're willing to negotiate.

We bought our flip at about 60% of ARV. It was listed at $127,000 and we bought it for $100,500. ARV is about $170,000. The house had a lot of cosmetic issues. It had been a rental for 10 years, and was not maintained. The most recent tenants had 8 dogs. There are a few foreclosures and vacant houses in the neighborhood. We got strong sense of motivation from this seller, who had already moved out of state.

Finish 100% of the work before moving in, if you can.

I managed this project myself, and I was under a tight time crunch. Our second baby was due Sept 3, and I had assured my wife we could move in by July 11th. Our actual move in date was the 14th. We resurfaced everything with new paint and flooring. We did a full renovation in the master bath. In the kitchen we painted the cabinets and installed all new stainless steel appliances. Overall we spent $18,700 on renovations and it took about 8 weeks. There were a few punch-list items that didn't get done before move in. The last 2 months have been so busy that these items have just lingered. Our next live-in-flip will definitely be 100% done before move in day.

Being your own GC feels like bleeding money every day.

I went to Lowes at least 50 times in 8 weeks. My crew probably went another 20 times. I bought and delivered most of the materials to the job site. I had to constantly remind myself that we were making money, because to me it felt like slowly bleeding out every day. I'm frugal. I usually don't spend money on anything but the bare necessities, so buying all the little construction nick-knacks really got to me.

During the time you're living in your flip you can help improve the neighborhood for extra returns.

Now that we live here, we've looked for other ways to improve our home's value. I've contacted most of the owners of the distressed homes in our neighborhood, and let them know I can connect them with investors when they're ready to sell. Also, this neighborhood is starting to fill with families and school age children. There is a serious movement to get our neighborhood annexed by a much higher ranking school system.

Going forward

Our plan is to live here for two years to avoid paying capital gains on the sale, then repeat the process. I needed a break from renovations after this one, but we're now looking for our next project.