My Flipping Journal - Part VIII (Final Entry)

Day 54 - We accepted an offer today! After a lot of interest and a couple of offers, we came to terms with a very strong offer. As the house was on the market for less than a month, coupled with it being our second official flip, we could not be happier. The price was very close to asking, and the buyer asked for a one year home warranty and June 2nd closing. While the closing will take longer than we hoped, the overall sale price made it worth waiting the additional month.

Day 66 - We received the results from the inspection report today. Fortunately, the seller’s only asked for a few items that were identified in the report. And most importantly, those items were already being addressed, as there were a few odds and ends that were unable to be completed prior to the inspection. Specifically, we ordered replacement windows. The company sent a few incorrect sizes and thus, we needed to reorder the correct sizes. The only item that requires getting someone out to do the work was the septic. They would like the septic pumped. Despite having already received a note from a previous inspector that the septic did not need to be emptied yet, we decided to just agree to the request. We received a quote for under $300 to have it completed. They also asked for a 1-year home warranty. We were able to secure the warranty for under $500, which will be included with our closing fees. As I always build in a contingency for homeowner requests (for requests like this, or if they ask for seller financing) we were able to just agree to all of the requests, while still having “bonus” money for us!

Day 100 - Mortgage commitment came in, we are now set for closing on June 2nd! While we keep asking the buyers if they want to move up settlement, they do not want to leave their lease early, as they will be responsible for both their rental payments and the mortgage for their new property.

Day 113 - I have called all of the utility companies and alerted them of the stop in service for the day after the sale. This will allow the new homeowners a day to transfer utilities over, if they have not done so in advance. The furniture from the staging has also been picked up. We are so close!

Day 129 - Closing Day!

Everything went as planned! The walk-through went well, and settlement went well. In fact, the buyer’s agent commented on how amazing the house finished. Side note: The buyer’s agent is from the same brokerage as the agent from which we bought the house. Thus, the buyer’s agent had previously seen the property when the agency sold it to us, and therefore, knew what it looked like originally. The buyer’s agent also noted that he has been in a lot of flips, and he has yet to see the quality of work we did. (Great job PM!!!!) Ok, so if you have been reading my postings since the beginning, you have patiently waited for the numbers. Without further ado...

Numbers (Key F-Forecasted; A-Actual):

Cost Analysis

Purchase Price - $312,500F ; $312,500A

Purchase Costs - $6,250F ; $5,599A

Holding Costs - $13,000F (assume 6 month hold) ; $4,951.21A

Selling Costs - $45,000F ; $32,604.94A

Sale Price - $460,000 (bottom line)F ; $470,000A

Profit - $40,000F ; $66,306.35A

Timeline Analysis

Renovation - 31 daysF ; 34 daysA

Open House Target - March 6F ; March 6A

Days on Market - 60 (goal) to 120 (max) daysF ; 21 daysA

Closing - 180 days from Acquisition F ; 123 days A

Lessons Learned:

I think I say this saying once a month, “Proper planning prevents poor performance”. PM & I knew we were going to do this daily journal. We knew people would be reading it. We also saw the opportunity in this house to turn it around quickly, while hopefully making a decent profit. That said, we spent hours before we purchased the house working out all of the details. To date, we spent the most hours on this house prior to acquisition than any other house. BUT, I think that is why it was a success. As PM knew I needed to know the day-to-day details for the blog, we spoke multiple times a day, to insure the blog contained everything we were going through. Due to these conversations alone, we brainstormed solutions together that typically PM just handles on his own whenever an issue arose. It was an amazing learning and growing experience for our company, and in the end PM and I took home over $66,000 for our time and effort. So I want to take a moment to thank everyone who has not only read the blog, but also provided feedback. You kept us driven to write our day-to-day experiences!

Task related, we learned you can repair stucco without a full remediation, you can refinish engineered hardwood, your neighbors most likely know where to find replacement materials, and you can do anything you set your mind to do.

Next Steps:

We are taking our lessons learned and applying it to our next project. We are also starting to look for funding, as we are hoping to pursue our next goal of handling more than one project at a time. We have the infrastructure in place, so we hope we can find a quick resolution to this hurdle.

Thank you again to everyone who has read our blogs!!